Correlation Between FTC Solar and Valens
Can any of the company-specific risk be diversified away by investing in both FTC Solar and Valens 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 FTC Solar and Valens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FTC Solar and Valens, you can compare the effects of market volatilities on FTC Solar and Valens 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 FTC Solar with a short position of Valens. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTC Solar and Valens.
Diversification Opportunities for FTC Solar and Valens
Very good diversification
The 3 months correlation between FTC and Valens is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding FTC Solar and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens and FTC 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 FTC Solar are associated (or correlated) with Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of FTC Solar i.e., FTC Solar and Valens go up and down completely randomly.
Pair Corralation between FTC Solar and Valens
Given the investment horizon of 90 days FTC Solar is expected to generate 2.61 times more return on investment than Valens. However, FTC Solar is 2.61 times more volatile than Valens. It trades about -0.01 of its potential returns per unit of risk. Valens is currently generating about -0.05 per unit of risk. If you would invest 290.00 in FTC Solar on August 27, 2024 and sell it today you would lose (250.00) from holding FTC Solar or give up 86.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FTC Solar vs. Valens
Performance |
| Timeline |
| FTC Solar |
| Valens |
FTC Solar and Valens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTC Solar and Valens
The main advantage of trading using opposite FTC Solar and Valens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTC Solar position performs unexpectedly, Valens 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 Valens will offset losses from the drop in Valens' long position.| FTC Solar vs. Sunnova Energy International | FTC Solar vs. JinkoSolar Holding | FTC Solar vs. Nextracker Class A | FTC Solar vs. Canadian Solar |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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