Correlation Between Entegris and Enphase Energy

Can any of the company-specific risk be diversified away by investing in both Entegris and Enphase Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Entegris and Enphase Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Entegris and Enphase Energy, you can compare the effects of market volatilities on Entegris and Enphase Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Entegris with a short position of Enphase Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entegris and Enphase Energy.

Diversification Opportunities for Entegris and Enphase Energy

0.67

Correlation Coefficient

Entegris  Enphase Energy

Poor diversification

The 3 months correlation between Entegris and Enphase is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Entegris and Enphase Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enphase Energy and Entegris is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Entegris are associated (or correlated) with Enphase Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enphase Energy has no effect on the direction of Entegris i.e., Entegris and Enphase Energy go up and down completely randomly.

Pair Corralation between Entegris and Enphase Energy

Given the investment horizon of 90 days Entegris is expected to under-perform the Enphase Energy. But the stock apears to be less risky and, when comparing its historical volatility, Entegris is 1.44 times less risky than Enphase Energy. The stock trades about -0.07 of its potential returns per unit of risk. The Enphase Energy is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  10,185  in Enphase Energy on September 23, 2024 and sell it today you would lose (3,040) from holding Enphase Energy or give up 29.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Entegris  vs.  Enphase Energy

Entegris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entegris has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Enphase Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enphase Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Entegris and Enphase Energy

The main advantage of trading using opposite Entegris and Enphase Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entegris position performs unexpectedly, Enphase Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Enphase Energy will offset losses from the drop in Enphase Energy's long position.

The idea behind Entegris and Enphase Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.