Correlation Between FormFactor and Maxeon Solar

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

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

Diversification Opportunities for FormFactor and Maxeon Solar

-0.53

Correlation Coefficient

FormFactor  Maxeon Solar

Excellent diversification

The 3 months correlation between FormFactor and Maxeon is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding FormFactor 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 FormFactor 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 FormFactor 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 FormFactor i.e., FormFactor and Maxeon Solar go up and down completely randomly.

Pair Corralation between FormFactor and Maxeon Solar

Given the investment horizon of 90 days FormFactor is expected to generate 0.32 times more return on investment than Maxeon Solar. However, FormFactor is 3.11 times less risky than Maxeon Solar. It trades about 0.05 of its potential returns per unit of risk. Maxeon Solar Technologies is currently generating about -0.08 per unit of risk. If you would invest  2,793  in FormFactor on October 14, 2024 and sell it today you would earn a total of  1,629  from holding FormFactor or generate 58.32% return on investment over 90 days.

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

FormFactor  vs.  Maxeon Solar Technologies

FormFactor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FormFactor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, FormFactor is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Maxeon Solar Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maxeon Solar Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Maxeon Solar displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FormFactor and Maxeon Solar

The main advantage of trading using opposite FormFactor and Maxeon Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FormFactor 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 FormFactor 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 Transaction History module to view history of all your transactions and understand their impact on performance.