Correlation Between Signify NV and Advanced Energy
Can any of the company-specific risk be diversified away by investing in both Signify NV and Advanced 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 Signify NV and Advanced Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Signify NV and Advanced Energy Industries, you can compare the effects of market volatilities on Signify NV and Advanced 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 Signify NV with a short position of Advanced Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Signify NV and Advanced Energy.
Diversification Opportunities for Signify NV and Advanced Energy
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Signify and Advanced is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Signify NV and Advanced Energy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Energy Indu and Signify NV 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 Signify NV are associated (or correlated) with Advanced Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Energy Indu has no effect on the direction of Signify NV i.e., Signify NV and Advanced Energy go up and down completely randomly.
Pair Corralation between Signify NV and Advanced Energy
Assuming the 90 days horizon Signify NV is expected to under-perform the Advanced Energy. In addition to that, Signify NV is 1.13 times more volatile than Advanced Energy Industries. It trades about 0.0 of its total potential returns per unit of risk. Advanced Energy Industries is currently generating about 0.02 per unit of volatility. If you would invest 8,713 in Advanced Energy Industries on January 26, 2024 and sell it today you would earn a total of 571.00 from holding Advanced Energy Industries or generate 6.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Signify NV vs. Advanced Energy Industries
Performance |
Timeline |
Signify NV |
Advanced Energy Indu |
Signify NV and Advanced Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Signify NV and Advanced Energy
The main advantage of trading using opposite Signify NV and Advanced Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Signify NV position performs unexpectedly, Advanced 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 Advanced Energy will offset losses from the drop in Advanced Energy's long position.Signify NV vs. Sunrise New Energy | Signify NV vs. Alfen NV | Signify NV vs. ADS TEC ENERGY PLC | Signify NV vs. Ads Tec Energy |
Advanced Energy vs. Hayward Holdings | Advanced Energy vs. Hollysys Automation Technologies | Advanced Energy vs. Enersys | Advanced Energy vs. Espey Mfg Electronics |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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