Correlation Between First Solar and Danaher
Can any of the company-specific risk be diversified away by investing in both First Solar and Danaher 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 First Solar and Danaher into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Solar and Danaher, you can compare the effects of market volatilities on First Solar and Danaher 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 First Solar with a short position of Danaher. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and Danaher.
Diversification Opportunities for First Solar and Danaher
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Danaher is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and Danaher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danaher and First 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 First Solar are associated (or correlated) with Danaher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danaher has no effect on the direction of First Solar i.e., First Solar and Danaher go up and down completely randomly.
Pair Corralation between First Solar and Danaher
Assuming the 90 days trading horizon First Solar is expected to under-perform the Danaher. In addition to that, First Solar is 2.06 times more volatile than Danaher. It trades about -0.08 of its total potential returns per unit of risk. Danaher is currently generating about 0.03 per unit of volatility. If you would invest 488,802 in Danaher on October 30, 2024 and sell it today you would earn a total of 10,998 from holding Danaher or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Solar vs. Danaher
Performance |
| Timeline |
| First Solar |
| Danaher |
First Solar and Danaher Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and Danaher
The main advantage of trading using opposite First Solar and Danaher positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar position performs unexpectedly, Danaher 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 Danaher will offset losses from the drop in Danaher's long position.| First Solar vs. Grupo Sports World | First Solar vs. Cognizant Technology Solutions | First Solar vs. First Majestic Silver | First Solar vs. The Bank of |
| Danaher vs. Thermo Fisher Scientific | Danaher vs. Fideicomiso Irrevocable No | Danaher vs. CEMEX SAB de | Danaher vs. Royal Caribbean 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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