Correlation Between Canadian Solar and SolarEdge Technologies
Can any of the company-specific risk be diversified away by investing in both Canadian 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 Canadian 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 Canadian Solar and SolarEdge Technologies, you can compare the effects of market volatilities on Canadian 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 Canadian Solar with a short position of SolarEdge Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Solar and SolarEdge Technologies.
Diversification Opportunities for Canadian Solar and SolarEdge Technologies
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Canadian and SolarEdge is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Solar and SolarEdge Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarEdge Technologies 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 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 Canadian Solar i.e., Canadian Solar and SolarEdge Technologies go up and down completely randomly.
Pair Corralation between Canadian Solar and SolarEdge Technologies
Given the investment horizon of 90 days Canadian Solar is expected to generate 1.72 times less return on investment than SolarEdge Technologies. But when comparing it to its historical volatility, Canadian Solar is 1.6 times less risky than SolarEdge Technologies. It trades about 0.18 of its potential returns per unit of risk. SolarEdge Technologies is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,210 in SolarEdge Technologies on April 21, 2025 and sell it today you would earn a total of 1,452 from holding SolarEdge Technologies or generate 120.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Solar vs. SolarEdge Technologies
Performance |
| Timeline |
| Canadian Solar |
| SolarEdge Technologies |
Canadian Solar and SolarEdge Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Solar and SolarEdge Technologies
The main advantage of trading using opposite Canadian Solar and SolarEdge Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian 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.| Canadian Solar vs. JinkoSolar Holding | Canadian Solar vs. First Solar | Canadian Solar vs. Complete Solaria, | Canadian Solar vs. SolarEdge Technologies |
| SolarEdge Technologies vs. Enphase Energy | SolarEdge Technologies vs. First Solar | SolarEdge Technologies vs. Sunrun Inc | SolarEdge Technologies vs. Canadian Solar |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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