Correlation Between First Solar and Array Technologies
Can any of the company-specific risk be diversified away by investing in both First Solar and Array Technologies 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 Array Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Solar and Array Technologies, you can compare the effects of market volatilities on First Solar and Array Technologies 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 Array Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and Array Technologies.
Diversification Opportunities for First Solar and Array Technologies
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and Array is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and Array Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Array Technologies 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 Array Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Array Technologies has no effect on the direction of First Solar i.e., First Solar and Array Technologies go up and down completely randomly.
Pair Corralation between First Solar and Array Technologies
Given the investment horizon of 90 days First Solar is expected to generate 0.69 times more return on investment than Array Technologies. However, First Solar is 1.44 times less risky than Array Technologies. It trades about 0.02 of its potential returns per unit of risk. Array Technologies is currently generating about -0.05 per unit of risk. If you would invest 19,233 in First Solar on August 31, 2024 and sell it today you would earn a total of 694.00 from holding First Solar or generate 3.61% 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. Array Technologies
Performance |
| Timeline |
| First Solar |
| Array Technologies |
First Solar and Array Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and Array Technologies
The main advantage of trading using opposite First Solar and Array Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar position performs unexpectedly, Array Technologies 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 Array Technologies will offset losses from the drop in Array Technologies' long position.| First Solar vs. Enphase Energy | First Solar vs. Sunrun Inc | First Solar vs. Canadian Solar | First Solar vs. SolarEdge Technologies |
| Array Technologies vs. SolarEdge Technologies | Array Technologies vs. Enphase Energy | Array Technologies vs. Canadian Solar | Array Technologies vs. Sunrun 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 the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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