Correlation Between First Solar and Nextracker
Can any of the company-specific risk be diversified away by investing in both First Solar and Nextracker 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 Nextracker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Solar and Nextracker Class A, you can compare the effects of market volatilities on First Solar and Nextracker 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 Nextracker. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and Nextracker.
Diversification Opportunities for First Solar and Nextracker
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Nextracker is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and Nextracker Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextracker Class A 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 Nextracker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextracker Class A has no effect on the direction of First Solar i.e., First Solar and Nextracker go up and down completely randomly.
Pair Corralation between First Solar and Nextracker
Given the investment horizon of 90 days First Solar is expected to generate 4.92 times less return on investment than Nextracker. But when comparing it to its historical volatility, First Solar is 1.22 times less risky than Nextracker. It trades about 0.04 of its potential returns per unit of risk. Nextracker Class A is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,640 in Nextracker Class A on October 20, 2024 and sell it today you would earn a total of 776.00 from holding Nextracker Class A or generate 21.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.35% |
| Values | Daily Returns |
First Solar vs. Nextracker Class A
Performance |
| Timeline |
| First Solar |
| Nextracker Class A |
First Solar and Nextracker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and Nextracker
The main advantage of trading using opposite First Solar and Nextracker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar position performs unexpectedly, Nextracker 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 Nextracker will offset losses from the drop in Nextracker's long position.| First Solar vs. Enphase Energy | First Solar vs. Sunrun Inc | First Solar vs. Canadian Solar | First Solar vs. SolarEdge Technologies |
| Nextracker vs. Custom Truck One | Nextracker vs. Vestis | Nextracker vs. FDG Electric Vehicles | Nextracker vs. Lendlease Global Commercial |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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