Correlation Between First Solar and Maxeon Solar

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

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

Diversification Opportunities for First Solar and Maxeon Solar

-0.71

Correlation Coefficient

First Solar  Maxeon Solar

Pay attention - limited upside

The 3 months correlation between First and Maxeon is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and Maxeon Solar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxeon Solar Technologies and First 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 First Solar are associated (or correlated) with Maxeon Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxeon Solar Technologies has no effect on the direction of First Solar i.e., First Solar and Maxeon Solar go up and down completely randomly.

Pair Corralation between First Solar and Maxeon Solar

Given the investment horizon of 90 days First Solar is expected to generate 8.37 times less return on investment than Maxeon Solar. But when comparing it to its historical volatility, First Solar is 6.91 times less risky than Maxeon Solar. It trades about 0.14 of its potential returns per unit of risk. Maxeon Solar Technologies is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  197.00  in Maxeon Solar Technologies on February 15, 2024 and sell it today you would earn a total of  84.00  from holding Maxeon Solar Technologies or generate 42.64% return on investment over 90 days.

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

First Solar  vs.  Maxeon Solar Technologies

First Solar

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Solar are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating essential indicators, First Solar reported solid returns over the last few months and may actually be approaching a breakup point.

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with First Solar and Maxeon Solar

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

The idea behind First Solar and Maxeon Solar 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.