Correlation Between First Solar and Skyworks Solutions
Can any of the company-specific risk be diversified away by investing in both First Solar and Skyworks Solutions 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 Skyworks Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Solar and Skyworks Solutions, you can compare the effects of market volatilities on First Solar and Skyworks Solutions 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 Skyworks Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and Skyworks Solutions.
Diversification Opportunities for First Solar and Skyworks Solutions
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Skyworks is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and Skyworks Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skyworks Solutions 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 Skyworks Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skyworks Solutions has no effect on the direction of First Solar i.e., First Solar and Skyworks Solutions go up and down completely randomly.
Pair Corralation between First Solar and Skyworks Solutions
Given the investment horizon of 90 days First Solar is expected to under-perform the Skyworks Solutions. But the stock apears to be less risky and, when comparing its historical volatility, First Solar is 1.58 times less risky than Skyworks Solutions. The stock trades about -0.29 of its potential returns per unit of risk. The Skyworks Solutions is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 8,547 in Skyworks Solutions on December 6, 2024 and sell it today you would lose (1,854) from holding Skyworks Solutions or give up 21.69% 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. Skyworks Solutions
Performance |
| Timeline |
| First Solar |
| Skyworks Solutions |
First Solar and Skyworks Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and Skyworks Solutions
The main advantage of trading using opposite First Solar and Skyworks Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar position performs unexpectedly, Skyworks Solutions 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 Skyworks Solutions will offset losses from the drop in Skyworks Solutions' long position.| First Solar vs. Enphase Energy | First Solar vs. Sunrun Inc | First Solar vs. Canadian Solar | First Solar vs. SolarEdge Technologies |
| Skyworks Solutions vs. Microchip Technology | Skyworks Solutions vs. Lattice Semiconductor | Skyworks Solutions vs. Synaptics Incorporated | Skyworks Solutions vs. NXP Semiconductors NV |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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