Correlation Between FTC Solar and Xperi Corp

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

By analyzing existing cross correlation between FTC Solar and Xperi Corp, you can compare the effects of market volatilities on FTC Solar and Xperi Corp 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 Xperi Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTC Solar and Xperi Corp.

Diversification Opportunities for FTC Solar and Xperi Corp

-0.33

Correlation Coefficient

FTC Solar  Xperi Corp

Very good diversification

The 3 months correlation between FTC and Xperi is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding FTC Solar and Xperi Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xperi Corp 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 Xperi Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xperi Corp has no effect on the direction of FTC Solar i.e., FTC Solar and Xperi Corp go up and down completely randomly.

Pair Corralation between FTC Solar and Xperi Corp

Given the investment horizon of 90 days FTC Solar is expected to generate 4.27 times more return on investment than Xperi Corp. However, FTC Solar is 4.27 times more volatile than Xperi Corp. It trades about 0.06 of its potential returns per unit of risk. Xperi Corp is currently generating about 0.09 per unit of risk. If you would invest  303.00  in FTC Solar on September 27, 2024 and sell it today you would earn a total of  54.00  from holding FTC Solar or generate 17.82% return on investment over 90 days.

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

FTC Solar  vs.  Xperi Corp

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.

Xperi Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xperi Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Xperi Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FTC Solar and Xperi Corp

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

The idea behind FTC Solar and Xperi Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.