Correlation Between Nextracker and First Solar
Can any of the company-specific risk be diversified away by investing in both Nextracker 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 Nextracker and First Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextracker Class A and First Solar, you can compare the effects of market volatilities on Nextracker 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 Nextracker with a short position of First Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextracker and First Solar.
Diversification Opportunities for Nextracker and First Solar
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nextracker and First is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nextracker Class A and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar and Nextracker 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 Nextracker Class A 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 Nextracker i.e., Nextracker and First Solar go up and down completely randomly.
Pair Corralation between Nextracker and First Solar
Considering the 90-day investment horizon Nextracker Class A is expected to generate 1.24 times more return on investment than First Solar. However, Nextracker is 1.24 times more volatile than First Solar. It trades about 0.05 of its potential returns per unit of risk. First Solar is currently generating about -0.09 per unit of risk. If you would invest 4,067 in Nextracker Class A on November 28, 2024 and sell it today you would earn a total of 629.00 from holding Nextracker Class A or generate 15.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.37% |
| Values | Daily Returns |
Nextracker Class A vs. First Solar
Performance |
| Timeline |
| Nextracker Class A |
| First Solar |
Nextracker and First Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextracker and First Solar
The main advantage of trading using opposite Nextracker and First Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextracker 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.| Nextracker vs. National CineMedia | Nextracker vs. Highway Holdings Limited | Nextracker vs. Imax Corp | Nextracker vs. FMC Corporation |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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