Correlation Between Maxeon Solar and SolarEdge Technologies

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

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

Diversification Opportunities for Maxeon Solar and SolarEdge Technologies

0.43

Correlation Coefficient

Maxeon Solar  SolarEdge Technologies

Very weak diversification

The 3 months correlation between Maxeon and SolarEdge is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Maxeon Solar Technologies and SolarEdge Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarEdge Technologies and Maxeon 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 Maxeon Solar Technologies are associated (or correlated) with SolarEdge Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarEdge Technologies has no effect on the direction of Maxeon Solar i.e., Maxeon Solar and SolarEdge Technologies go up and down completely randomly.

Pair Corralation between Maxeon Solar and SolarEdge Technologies

Given the investment horizon of 90 days Maxeon Solar Technologies is expected to generate 3.98 times more return on investment than SolarEdge Technologies. However, Maxeon Solar is 3.98 times more volatile than SolarEdge Technologies. It trades about 0.04 of its potential returns per unit of risk. SolarEdge Technologies is currently generating about -0.2 per unit of risk. If you would invest  223.00  in Maxeon Solar Technologies on March 5, 2024 and sell it today you would lose (35.00) from holding Maxeon Solar Technologies or give up 15.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Maxeon Solar Technologies  vs.  SolarEdge Technologies

Maxeon Solar Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maxeon Solar Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

SolarEdge Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SolarEdge Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Maxeon Solar and SolarEdge Technologies

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

The idea behind Maxeon Solar Technologies and SolarEdge Technologies 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.