Correlation Between Beam Global and Shoals Technologies

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

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

Diversification Opportunities for Beam Global and Shoals Technologies

0.9

Correlation Coefficient

Beam Global  Shoals Technologies

Almost no diversification

The 3 months correlation between Beam and Shoals is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Beam Global and Shoals Technologies Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoals Technologies and Beam Global 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 Beam Global are associated (or correlated) with Shoals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoals Technologies has no effect on the direction of Beam Global i.e., Beam Global and Shoals Technologies go up and down completely randomly.

Pair Corralation between Beam Global and Shoals Technologies

Given the investment horizon of 90 days Beam Global is expected to under-perform the Shoals Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Beam Global is 1.21 times less risky than Shoals Technologies. The stock trades about -0.17 of its potential returns per unit of risk. The Shoals Technologies Group is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  564.00  in Shoals Technologies Group on December 27, 2024 and sell it today you would lose (230.00) from holding Shoals Technologies Group or give up 40.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Beam Global  vs.  Shoals Technologies Group

Beam Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beam Global 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Shoals Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shoals Technologies Group 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 essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Beam Global and Shoals Technologies

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

The idea behind Beam Global and Shoals Technologies Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.