Correlation Between First Solar and Zeo Energy
Can any of the company-specific risk be diversified away by investing in both First Solar and Zeo 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 Zeo 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 Zeo Energy Corp, you can compare the effects of market volatilities on First Solar and Zeo 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 Zeo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and Zeo Energy.
Diversification Opportunities for First Solar and Zeo Energy
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Zeo is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and Zeo Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeo Energy Corp 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 Zeo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeo Energy Corp has no effect on the direction of First Solar i.e., First Solar and Zeo Energy go up and down completely randomly.
Pair Corralation between First Solar and Zeo Energy
Given the investment horizon of 90 days First Solar is expected to under-perform the Zeo Energy. But the stock apears to be less risky and, when comparing its historical volatility, First Solar is 1.79 times less risky than Zeo Energy. The stock trades about -0.03 of its potential returns per unit of risk. The Zeo Energy Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 225.00 in Zeo Energy Corp on November 29, 2024 and sell it today you would lose (6.00) from holding Zeo Energy Corp or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Solar vs. Zeo Energy Corp
Performance |
| Timeline |
| First Solar |
| Zeo Energy Corp |
First Solar and Zeo Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and Zeo Energy
The main advantage of trading using opposite First Solar and Zeo Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar position performs unexpectedly, Zeo 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 Zeo Energy will offset losses from the drop in Zeo Energy's long position.| First Solar vs. Enphase Energy | First Solar vs. Sunrun Inc | First Solar vs. Canadian Solar | First Solar vs. SolarEdge Technologies |
| Zeo Energy vs. United Microelectronics | Zeo Energy vs. Entegris | Zeo Energy vs. Arm Holdings plc | Zeo Energy vs. Encore Capital Group |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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