Correlation Between First Solar and ON Semiconductor
Can any of the company-specific risk be diversified away by investing in both First Solar and ON Semiconductor 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 ON Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Solar and ON Semiconductor, you can compare the effects of market volatilities on First Solar and ON Semiconductor 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 ON Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and ON Semiconductor.
Diversification Opportunities for First Solar and ON Semiconductor
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and ON Semiconductor is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and ON Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON Semiconductor 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 ON Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON Semiconductor has no effect on the direction of First Solar i.e., First Solar and ON Semiconductor go up and down completely randomly.
Pair Corralation between First Solar and ON Semiconductor
Given the investment horizon of 90 days First Solar is expected to under-perform the ON Semiconductor. In addition to that, First Solar is 1.62 times more volatile than ON Semiconductor. It trades about -0.16 of its total potential returns per unit of risk. ON Semiconductor is currently generating about -0.02 per unit of volatility. If you would invest 7,261 in ON Semiconductor on August 30, 2024 and sell it today you would lose (226.00) from holding ON Semiconductor or give up 3.11% 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. ON Semiconductor
Performance |
| Timeline |
| First Solar |
| ON Semiconductor |
First Solar and ON Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and ON Semiconductor
The main advantage of trading using opposite First Solar and ON Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar position performs unexpectedly, ON Semiconductor 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 ON Semiconductor will offset losses from the drop in ON Semiconductor's long position.| First Solar vs. Enphase Energy | First Solar vs. Sunrun Inc | First Solar vs. Canadian Solar | First Solar vs. SolarEdge Technologies |
| ON Semiconductor vs. First Solar | ON Semiconductor vs. Sunrun Inc | ON Semiconductor vs. Canadian Solar | ON Semiconductor vs. SolarEdge Technologies |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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