Correlation Between Gfl Environmental and First Solar
Can any of the company-specific risk be diversified away by investing in both Gfl Environmental and First Solar 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 Gfl Environmental and First Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gfl Environmental Holdings and First Solar, you can compare the effects of market volatilities on Gfl Environmental and First Solar 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 Gfl Environmental with a short position of First Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gfl Environmental and First Solar.
Diversification Opportunities for Gfl Environmental and First Solar
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gfl and First is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Gfl Environmental Holdings and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar and Gfl Environmental 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 Gfl Environmental Holdings are associated (or correlated) with First Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Solar has no effect on the direction of Gfl Environmental i.e., Gfl Environmental and First Solar go up and down completely randomly.
Pair Corralation between Gfl Environmental and First Solar
Considering the 90-day investment horizon Gfl Environmental is expected to generate 1.12 times less return on investment than First Solar. But when comparing it to its historical volatility, Gfl Environmental Holdings is 1.96 times less risky than First Solar. It trades about 0.08 of its potential returns per unit of risk. First Solar is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15,389 in First Solar on August 27, 2024 and sell it today you would earn a total of 3,216 from holding First Solar or generate 20.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gfl Environmental Holdings vs. First Solar
Performance |
| Timeline |
| Gfl Environmental |
| First Solar |
Gfl Environmental and First Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gfl Environmental and First Solar
The main advantage of trading using opposite Gfl Environmental and First Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gfl Environmental position performs unexpectedly, First Solar 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 First Solar will offset losses from the drop in First Solar's long position.| Gfl Environmental vs. Clean Harbors | Gfl Environmental vs. Waste Connections | Gfl Environmental vs. Republic Services | Gfl Environmental vs. Casella Waste Systems |
| First Solar vs. Enphase Energy | First Solar vs. Sunrun Inc | First Solar vs. Canadian Solar | First Solar 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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