Correlation Between First Solar and Grupo Sports
Can any of the company-specific risk be diversified away by investing in both First Solar and Grupo Sports 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 Grupo Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Solar and Grupo Sports World, you can compare the effects of market volatilities on First Solar and Grupo Sports 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 Grupo Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and Grupo Sports.
Diversification Opportunities for First Solar and Grupo Sports
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Grupo is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and Grupo Sports World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Sports World 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 Grupo Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Sports World has no effect on the direction of First Solar i.e., First Solar and Grupo Sports go up and down completely randomly.
Pair Corralation between First Solar and Grupo Sports
Assuming the 90 days trading horizon First Solar is expected to generate 2.31 times more return on investment than Grupo Sports. However, First Solar is 2.31 times more volatile than Grupo Sports World. It trades about 0.17 of its potential returns per unit of risk. Grupo Sports World is currently generating about -0.06 per unit of risk. If you would invest 370,543 in First Solar on September 14, 2024 and sell it today you would earn a total of 34,357 from holding First Solar or generate 9.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Solar vs. Grupo Sports World
Performance |
| Timeline |
| First Solar |
| Grupo Sports World |
First Solar and Grupo Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and Grupo Sports
The main advantage of trading using opposite First Solar and Grupo Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar position performs unexpectedly, Grupo Sports 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 Grupo Sports will offset losses from the drop in Grupo Sports' long position.| First Solar vs. United Airlines Holdings | First Solar vs. KB Home | First Solar vs. Grupo Sports World | First Solar vs. Delta Air Lines |
| Grupo Sports vs. United States Steel | Grupo Sports vs. Verizon Communications | Grupo Sports vs. Southwest Airlines | Grupo Sports vs. Deutsche Bank Aktiengesellschaft |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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