Correlation Between First Solar and Canadian Solar
Can any of the company-specific risk be diversified away by investing in both First Solar and Canadian 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 First Solar and Canadian Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Solar and Canadian Solar, you can compare the effects of market volatilities on First Solar and Canadian 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 First Solar with a short position of Canadian Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and Canadian Solar.
Diversification Opportunities for First Solar and Canadian Solar
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Canadian is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and Canadian Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Solar 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 Canadian Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Solar has no effect on the direction of First Solar i.e., First Solar and Canadian Solar go up and down completely randomly.
Pair Corralation between First Solar and Canadian Solar
Given the investment horizon of 90 days First Solar is expected to under-perform the Canadian Solar. But the stock apears to be less risky and, when comparing its historical volatility, First Solar is 1.93 times less risky than Canadian Solar. The stock trades about -0.05 of its potential returns per unit of risk. The Canadian Solar is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,196 in Canadian Solar on August 24, 2024 and sell it today you would lose (66.00) from holding Canadian Solar or give up 5.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Solar vs. Canadian Solar
Performance |
| Timeline |
| First Solar |
| Canadian Solar |
First Solar and Canadian Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and Canadian Solar
The main advantage of trading using opposite First Solar and Canadian Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar position performs unexpectedly, Canadian 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 Canadian Solar will offset losses from the drop in Canadian Solar's long position.| First Solar vs. Enphase Energy | First Solar vs. Sunrun Inc | First Solar vs. Canadian Solar | First Solar vs. SolarEdge Technologies |
| Canadian Solar vs. Maxeon Solar Technologies | Canadian Solar vs. SolarEdge Technologies | Canadian Solar vs. Sunnova Energy International | Canadian Solar vs. Enphase Energy |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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