Correlation Between Canadian Solar and Real Goods

Can any of the company-specific risk be diversified away by investing in both Canadian Solar and Real Goods 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 Canadian Solar and Real Goods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canadian Solar and Real Goods Solar, you can compare the effects of market volatilities on Canadian Solar and Real Goods 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 Canadian Solar with a short position of Real Goods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Solar and Real Goods.

Diversification Opportunities for Canadian Solar and Real Goods

0.0

Correlation Coefficient

Canadian Solar  Real Goods

Pay attention - limited upside

The 3 months correlation between Canadian and Real is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Solar and Real Goods Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Goods Solar and Canadian 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 Canadian Solar are associated (or correlated) with Real Goods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Goods Solar has no effect on the direction of Canadian Solar i.e., Canadian Solar and Real Goods go up and down completely randomly.

Pair Corralation between Canadian Solar and Real Goods

If you would invest (100.00) in Real Goods Solar on February 6, 2024 and sell it today you would earn a total of  100.00  from holding Real Goods Solar or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Canadian Solar  vs.  Real Goods Solar

Canadian Solar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Solar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Real Goods Solar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Goods Solar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Real Goods is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Canadian Solar and Real Goods

The main advantage of trading using opposite Canadian Solar and Real Goods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Solar position performs unexpectedly, Real Goods 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 Real Goods will offset losses from the drop in Real Goods' long position.

The idea behind Canadian Solar and Real Goods Solar pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.