Correlation Between SolarEdge Technologies and Canadian Solar
Can any of the company-specific risk be diversified away by investing in both SolarEdge Technologies 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 SolarEdge Technologies and Canadian Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SolarEdge Technologies and Canadian Solar, you can compare the effects of market volatilities on SolarEdge Technologies 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 SolarEdge Technologies with a short position of Canadian Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolarEdge Technologies and Canadian Solar.
Diversification Opportunities for SolarEdge Technologies and Canadian Solar
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SolarEdge and Canadian is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SolarEdge Technologies and Canadian Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Solar and SolarEdge Technologies 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 SolarEdge Technologies 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 SolarEdge Technologies i.e., SolarEdge Technologies and Canadian Solar go up and down completely randomly.
Pair Corralation between SolarEdge Technologies and Canadian Solar
Given the investment horizon of 90 days SolarEdge Technologies is expected to generate 1.02 times more return on investment than Canadian Solar. However, SolarEdge Technologies is 1.02 times more volatile than Canadian Solar. It trades about -0.13 of its potential returns per unit of risk. Canadian Solar is currently generating about -0.3 per unit of risk. If you would invest 6,545 in SolarEdge Technologies on January 20, 2024 and sell it today you would lose (806.00) from holding SolarEdge Technologies or give up 12.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolarEdge Technologies vs. Canadian Solar
Performance |
| Timeline |
| SolarEdge Technologies |
| Canadian Solar |
SolarEdge Technologies and Canadian Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolarEdge Technologies and Canadian Solar
The main advantage of trading using opposite SolarEdge Technologies and Canadian Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolarEdge Technologies 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.| SolarEdge Technologies vs. First Solar | SolarEdge Technologies vs. Sunrun Inc | SolarEdge Technologies vs. Canadian Solar | SolarEdge Technologies vs. SunPower |
| Canadian Solar vs. Maxeon Solar Technologies | Canadian Solar vs. SunPower | Canadian Solar vs. SolarEdge Technologies | Canadian Solar vs. Sunnova Energy International |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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