Correlation Between Canadian Solar and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Canadian Solar and Dow Jones 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 Canadian Solar and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Solar and Dow Jones Industrial, you can compare the effects of market volatilities on Canadian Solar and Dow Jones 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 Canadian Solar with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Solar and Dow Jones.
Diversification Opportunities for Canadian Solar and Dow Jones
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canadian and Dow is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Solar and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Canadian Solar 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 Canadian Solar are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Canadian Solar i.e., Canadian Solar and Dow Jones go up and down completely randomly.
Pair Corralation between Canadian Solar and Dow Jones
Given the investment horizon of 90 days Canadian Solar is expected to generate 1.33 times less return on investment than Dow Jones. In addition to that, Canadian Solar is 7.54 times more volatile than Dow Jones Industrial. It trades about 0.02 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.21 per unit of volatility. If you would invest 4,237,436 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 192,215 from holding Dow Jones Industrial or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Solar vs. Dow Jones Industrial
Performance |
| Timeline |
Canadian Solar and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Canadian Solar
Pair trading matchups for Canadian Solar
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Canadian Solar and Dow Jones
The main advantage of trading using opposite Canadian Solar and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Solar position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Canadian Solar vs. Maxeon Solar Technologies | Canadian Solar vs. SolarEdge Technologies | Canadian Solar vs. Sunnova Energy International | Canadian Solar vs. Enphase Energy |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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