Correlation Between Intel and Enphase Energy

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

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

Diversification Opportunities for Intel and Enphase Energy

0.34

Correlation Coefficient

Intel  Enphase Energy

Weak diversification

The 3 months correlation between Intel and Enphase is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Enphase Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enphase Energy and Intel 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 Intel 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 Intel i.e., Intel and Enphase Energy go up and down completely randomly.

Pair Corralation between Intel and Enphase Energy

Given the investment horizon of 90 days Intel is expected to generate 229.04 times less return on investment than Enphase Energy. But when comparing it to its historical volatility, Intel is 2.09 times less risky than Enphase Energy. It trades about 0.0 of its potential returns per unit of risk. Enphase Energy is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  10,516  in Enphase Energy on March 2, 2024 and sell it today you would earn a total of  2,550  from holding Enphase Energy or generate 24.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Intel  vs.  Enphase Energy

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Enphase Energy

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enphase Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Enphase Energy may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Intel and Enphase Energy

The main advantage of trading using opposite Intel and Enphase Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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 Intel 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.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.