Correlation Between Sunworks and Enphase Energy

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

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

Diversification Opportunities for Sunworks and Enphase Energy

-0.6

Correlation Coefficient

Sunworks  Enphase Energy

Excellent diversification

The 3 months correlation between Sunworks and Enphase is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sunworks and Enphase Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enphase Energy and Sunworks 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 Sunworks 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 Sunworks i.e., Sunworks and Enphase Energy go up and down completely randomly.

Pair Corralation between Sunworks and Enphase Energy

If you would invest  5,952  in Enphase Energy on September 16, 2024 and sell it today you would earn a total of  1,432  from holding Enphase Energy or generate 24.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Sunworks  vs.  Enphase Energy

Sunworks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunworks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sunworks is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 Sunworks and Enphase Energy

The main advantage of trading using opposite Sunworks and Enphase Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunworks 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 Sunworks 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.