Correlation Between Valmont Industries and Canadian Solar
Can any of the company-specific risk be diversified away by investing in both Valmont Industries and Canadian 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 Valmont Industries and Canadian Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valmont Industries and Canadian Solar, you can compare the effects of market volatilities on Valmont Industries and Canadian 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 Valmont Industries with a short position of Canadian Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valmont Industries and Canadian Solar.
Diversification Opportunities for Valmont Industries and Canadian Solar
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Valmont and Canadian is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Valmont Industries and Canadian Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Solar and Valmont Industries 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 Valmont Industries are associated (or correlated) with Canadian Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Solar has no effect on the direction of Valmont Industries i.e., Valmont Industries and Canadian Solar go up and down completely randomly.
Pair Corralation between Valmont Industries and Canadian Solar
Considering the 90-day investment horizon Valmont Industries is expected to generate 0.37 times more return on investment than Canadian Solar. However, Valmont Industries is 2.67 times less risky than Canadian Solar. It trades about 0.15 of its potential returns per unit of risk. Canadian Solar is currently generating about -0.03 per unit of risk. If you would invest 24,826 in Valmont Industries on August 27, 2024 and sell it today you would earn a total of 10,190 from holding Valmont Industries or generate 41.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valmont Industries vs. Canadian Solar
Performance |
| Timeline |
| Valmont Industries |
| Canadian Solar |
Valmont Industries and Canadian Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valmont Industries and Canadian Solar
The main advantage of trading using opposite Valmont Industries and Canadian Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valmont Industries position performs unexpectedly, Canadian 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 Canadian Solar will offset losses from the drop in Canadian Solar's long position.| Valmont Industries vs. Canadian Solar | Valmont Industries vs. Maxeon Solar Technologies | Valmont Industries vs. SolarEdge Technologies | Valmont Industries vs. Sunnova Energy International |
| Canadian Solar vs. Maxeon Solar Technologies | Canadian Solar vs. SolarEdge Technologies | Canadian Solar vs. Sunnova Energy International | Canadian Solar vs. Enphase Energy |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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