Correlation Between Canadian Solar and FTC Solar
Can any of the company-specific risk be diversified away by investing in both Canadian Solar and FTC Solar 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 FTC Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Solar and FTC Solar, you can compare the effects of market volatilities on Canadian Solar and FTC Solar 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 FTC Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Solar and FTC Solar.
Diversification Opportunities for Canadian Solar and FTC Solar
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canadian and FTC is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Solar and FTC Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTC Solar 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 FTC Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTC Solar has no effect on the direction of Canadian Solar i.e., Canadian Solar and FTC Solar go up and down completely randomly.
Pair Corralation between Canadian Solar and FTC Solar
Given the investment horizon of 90 days Canadian Solar is expected to generate 6.68 times less return on investment than FTC Solar. But when comparing it to its historical volatility, Canadian Solar is 2.52 times less risky than FTC Solar. It trades about 0.03 of its potential returns per unit of risk. FTC Solar is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 25.00 in FTC Solar on August 29, 2024 and sell it today you would earn a total of 11.00 from holding FTC Solar or generate 44.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Solar vs. FTC Solar
Performance |
| Timeline |
| Canadian Solar |
| FTC Solar |
Canadian Solar and FTC Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Solar and FTC Solar
The main advantage of trading using opposite Canadian Solar and FTC Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Solar position performs unexpectedly, FTC Solar 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 FTC Solar will offset losses from the drop in FTC Solar's long position.| Canadian Solar vs. Maxeon Solar Technologies | Canadian Solar vs. SolarEdge Technologies | Canadian Solar vs. Sunnova Energy International | Canadian Solar vs. Enphase Energy |
| FTC Solar vs. Sunnova Energy International | FTC Solar vs. JinkoSolar Holding | FTC Solar vs. Nextracker Class A | FTC Solar vs. Canadian Solar |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |