Correlation Between First Solar and MaxLinear
Can any of the company-specific risk be diversified away by investing in both First Solar and MaxLinear 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 MaxLinear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Solar and MaxLinear, you can compare the effects of market volatilities on First Solar and MaxLinear 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 MaxLinear. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and MaxLinear.
Diversification Opportunities for First Solar and MaxLinear
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and MaxLinear is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and MaxLinear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MaxLinear 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 MaxLinear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MaxLinear has no effect on the direction of First Solar i.e., First Solar and MaxLinear go up and down completely randomly.
Pair Corralation between First Solar and MaxLinear
Given the investment horizon of 90 days First Solar is expected to generate 0.4 times more return on investment than MaxLinear. However, First Solar is 2.49 times less risky than MaxLinear. It trades about -0.07 of its potential returns per unit of risk. MaxLinear is currently generating about -0.11 per unit of risk. If you would invest 16,431 in First Solar on November 28, 2024 and sell it today you would lose (747.00) from holding First Solar or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Solar vs. MaxLinear
Performance |
| Timeline |
| First Solar |
| MaxLinear |
First Solar and MaxLinear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and MaxLinear
The main advantage of trading using opposite First Solar and MaxLinear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar position performs unexpectedly, MaxLinear 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 MaxLinear will offset losses from the drop in MaxLinear's long position.| First Solar vs. Enphase Energy | First Solar vs. Sunrun Inc | First Solar vs. Canadian Solar | First Solar vs. SolarEdge Technologies |
| MaxLinear vs. ASE Industrial Holding | MaxLinear vs. Himax Technologies | MaxLinear vs. United Microelectronics | MaxLinear vs. SemiLEDS |
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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