Correlation Between Enphase Energy and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both Enphase Energy and Meta Platforms 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 Enphase Energy and Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enphase Energy and Meta Platforms, you can compare the effects of market volatilities on Enphase Energy and Meta Platforms 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 Enphase Energy with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enphase Energy and Meta Platforms.
Diversification Opportunities for Enphase Energy and Meta Platforms
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Enphase and Meta is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Enphase Energy and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and Enphase Energy 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 Enphase Energy are associated (or correlated) with Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of Enphase Energy i.e., Enphase Energy and Meta Platforms go up and down completely randomly.
Pair Corralation between Enphase Energy and Meta Platforms
If you would invest 12,111 in Enphase Energy on December 29, 2023 and sell it today you would lose (131.00) from holding Enphase Energy or give up 1.08% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 4.55% |
Values | Daily Returns |
Enphase Energy vs. Meta Platforms
Performance |
Timeline |
Enphase Energy |
Meta Platforms |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Enphase Energy and Meta Platforms Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Enphase Energy and Meta Platforms
The main advantage of trading using opposite Enphase Energy and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enphase Energy position performs unexpectedly, Meta Platforms 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 Meta Platforms will offset losses from the drop in Meta Platforms' long position.Enphase Energy vs. NeogamesSA | Enphase Energy vs. Advanced Micro Devices | Enphase Energy vs. Transphorm Technology | Enphase Energy vs. Integrated Media Technology |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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