Correlation Between FTC Solar and Indie Semiconductor

Can any of the company-specific risk be diversified away by investing in both FTC Solar and Indie Semiconductor 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 FTC Solar and Indie Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FTC Solar and indie Semiconductor, you can compare the effects of market volatilities on FTC Solar and Indie Semiconductor 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 FTC Solar with a short position of Indie Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTC Solar and Indie Semiconductor.

Diversification Opportunities for FTC Solar and Indie Semiconductor

-0.59

Correlation Coefficient

FTC Solar  Indie Semiconductor

Excellent diversification

The 3 months correlation between FTC and Indie is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding FTC Solar and indie Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on indie Semiconductor and FTC Solar 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 FTC Solar are associated (or correlated) with Indie Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of indie Semiconductor has no effect on the direction of FTC Solar i.e., FTC Solar and Indie Semiconductor go up and down completely randomly.

Pair Corralation between FTC Solar and Indie Semiconductor

Given the investment horizon of 90 days FTC Solar is expected to generate 1.7 times more return on investment than Indie Semiconductor. However, FTC Solar is 1.7 times more volatile than indie Semiconductor. It trades about 0.03 of its potential returns per unit of risk. indie Semiconductor is currently generating about -0.01 per unit of risk. If you would invest  440.00  in FTC Solar on September 19, 2024 and sell it today you would lose (114.50) from holding FTC Solar or give up 26.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

FTC Solar  vs.  indie Semiconductor

FTC Solar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FTC Solar 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 fundamental 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.

indie Semiconductor

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in indie Semiconductor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Indie Semiconductor demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FTC Solar and Indie Semiconductor

The main advantage of trading using opposite FTC Solar and Indie Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTC Solar position performs unexpectedly, Indie Semiconductor 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 Indie Semiconductor will offset losses from the drop in Indie Semiconductor's long position.

The idea behind FTC Solar and indie Semiconductor 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.