Correlation Between Maxeon Solar and Skyworks Solutions

Can any of the company-specific risk be diversified away by investing in both Maxeon Solar and Skyworks Solutions 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 Skyworks Solutions 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 Skyworks Solutions, you can compare the effects of market volatilities on Maxeon Solar and Skyworks Solutions 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 Skyworks Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maxeon Solar and Skyworks Solutions.

Diversification Opportunities for Maxeon Solar and Skyworks Solutions

0.2

Correlation Coefficient

Maxeon Solar  Skyworks Solutions

Modest diversification

The 3 months correlation between Maxeon and Skyworks is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Maxeon Solar Technologies and Skyworks Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skyworks Solutions 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 Skyworks Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skyworks Solutions has no effect on the direction of Maxeon Solar i.e., Maxeon Solar and Skyworks Solutions go up and down completely randomly.

Pair Corralation between Maxeon Solar and Skyworks Solutions

Given the investment horizon of 90 days Maxeon Solar Technologies is expected to under-perform the Skyworks Solutions. In addition to that, Maxeon Solar is 3.33 times more volatile than Skyworks Solutions. It trades about -0.08 of its total potential returns per unit of risk. Skyworks Solutions is currently generating about -0.19 per unit of volatility. If you would invest  10,959  in Skyworks Solutions on July 1, 2024 and sell it today you would lose (1,074) from holding Skyworks Solutions or give up 9.8% of portfolio value over 90 days.

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

Maxeon Solar Technologies  vs.  Skyworks Solutions

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 October 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Skyworks Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skyworks Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Skyworks Solutions is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Maxeon Solar and Skyworks Solutions

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

The idea behind Maxeon Solar Technologies and Skyworks Solutions 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 Transaction History module to view history of all your transactions and understand their impact on performance.