Correlation Between SMA Solar and Enphase Energy
Can any of the company-specific risk be diversified away by investing in both SMA Solar 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 SMA Solar and Enphase Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Enphase Energy, you can compare the effects of market volatilities on SMA Solar 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 SMA Solar with a short position of Enphase Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Enphase Energy.
Diversification Opportunities for SMA Solar and Enphase Energy
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SMA and Enphase is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Enphase Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enphase Energy and SMA 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and Enphase Energy go up and down completely randomly.
Pair Corralation between SMA Solar and Enphase Energy
Assuming the 90 days horizon SMA Solar Technology is expected to generate 1.85 times more return on investment than Enphase Energy. However, SMA Solar is 1.85 times more volatile than Enphase Energy. It trades about 0.14 of its potential returns per unit of risk. Enphase Energy is currently generating about -0.08 per unit of risk. If you would invest 149.00 in SMA Solar Technology on December 27, 2024 and sell it today you would earn a total of 77.00 from holding SMA Solar Technology or generate 51.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.36% |
Values | Daily Returns |
SMA Solar Technology vs. Enphase Energy
Performance |
Timeline |
SMA Solar Technology |
Enphase Energy |
SMA Solar and Enphase Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SMA Solar and Enphase Energy
The main advantage of trading using opposite SMA Solar and Enphase Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar 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.SMA Solar vs. Xinyi Solar Holdings | SMA Solar vs. Xinyi Solar Holdings | SMA Solar vs. SolarEdge Technologies | SMA Solar vs. Sunrun Inc |
Enphase Energy vs. First Solar | Enphase Energy vs. Sunrun Inc | Enphase Energy vs. Canadian Solar | Enphase Energy vs. SolarEdge Technologies |
Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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