Correlation Between First Solar and Tigo Energy
Can any of the company-specific risk be diversified away by investing in both First Solar and Tigo Energy 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 Tigo Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Solar and Tigo Energy, you can compare the effects of market volatilities on First Solar and Tigo Energy 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 Tigo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and Tigo Energy.
Diversification Opportunities for First Solar and Tigo Energy
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Tigo is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and Tigo Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigo Energy 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 Tigo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigo Energy has no effect on the direction of First Solar i.e., First Solar and Tigo Energy go up and down completely randomly.
Pair Corralation between First Solar and Tigo Energy
Given the investment horizon of 90 days First Solar is expected to generate 0.46 times more return on investment than Tigo Energy. However, First Solar is 2.18 times less risky than Tigo Energy. It trades about 0.03 of its potential returns per unit of risk. Tigo Energy is currently generating about -0.03 per unit of risk. If you would invest 15,022 in First Solar on September 14, 2024 and sell it today you would earn a total of 4,610 from holding First Solar or generate 30.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Solar vs. Tigo Energy
Performance |
| Timeline |
| First Solar |
| Tigo Energy |
First Solar and Tigo Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and Tigo Energy
The main advantage of trading using opposite First Solar and Tigo Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar position performs unexpectedly, Tigo Energy 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 Tigo Energy will offset losses from the drop in Tigo Energy's long position.| First Solar vs. ON Semiconductor | First Solar vs. Globalfoundries | First Solar vs. Wisekey International Holding | First Solar vs. Nano Labs |
| Tigo Energy vs. Mangazeya Mining | Tigo Energy vs. Summit Materials | Tigo Energy vs. Eltek | Tigo Energy vs. Evolution Mining |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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