Correlation Between Archrock and Enphase Energy

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Can any of the company-specific risk be diversified away by investing in both Archrock 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 Archrock and Enphase Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archrock and Enphase Energy, you can compare the effects of market volatilities on Archrock 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 Archrock with a short position of Enphase Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archrock and Enphase Energy.

Diversification Opportunities for Archrock and Enphase Energy

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Archrock and Enphase is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Archrock and Enphase Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enphase Energy and Archrock 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 Archrock 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 Archrock i.e., Archrock and Enphase Energy go up and down completely randomly.

Pair Corralation between Archrock and Enphase Energy

Given the investment horizon of 90 days Archrock is expected to under-perform the Enphase Energy. But the stock apears to be less risky and, when comparing its historical volatility, Archrock is 1.62 times less risky than Enphase Energy. The stock trades about -0.12 of its potential returns per unit of risk. The Enphase Energy is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  19,259  in Enphase Energy on July 2, 2022 and sell it today you would earn a total of  8,488  from holding Enphase Energy or generate 44.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Archrock  vs.  Enphase Energy

 Performance (%) 
       Timeline  
Archrock 
Archrock Performance
0 of 100
Over the last 90 days Archrock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Archrock Price Channel

Enphase Energy 
Enphase Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Enphase Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Enphase Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Enphase Price Channel

Archrock and Enphase Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Archrock and Enphase Energy

The main advantage of trading using opposite Archrock and Enphase Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archrock 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.
Archrock vs. Amazon Inc
The idea behind Archrock 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.
Enphase Energy vs. Amazon Inc
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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