Correlation Between Maxeon Solar and Canadian Solar

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

Diversification Opportunities for Maxeon Solar and Canadian Solar

0.75

Correlation Coefficient

Maxeon Solar  Canadian Solar

Poor diversification

The 3 months correlation between Maxeon and Canadian is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Maxeon Solar Technologies and Canadian Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Solar 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 Canadian Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Solar has no effect on the direction of Maxeon Solar i.e., Maxeon Solar and Canadian Solar go up and down completely randomly.

Pair Corralation between Maxeon Solar and Canadian Solar

Given the investment horizon of 90 days Maxeon Solar Technologies is expected to under-perform the Canadian Solar. In addition to that, Maxeon Solar is 1.76 times more volatile than Canadian Solar. It trades about -0.22 of its total potential returns per unit of risk. Canadian Solar is currently generating about -0.07 per unit of volatility. If you would invest  1,123  in Canadian Solar on December 29, 2024 and sell it today you would lose (200.00) from holding Canadian Solar or give up 17.81% of portfolio value over 90 days.

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

Maxeon Solar Technologies  vs.  Canadian Solar

Maxeon Solar Technologies

Risk-Adjusted Performance

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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Canadian Solar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canadian Solar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Maxeon Solar and Canadian Solar

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

The idea behind Maxeon Solar Technologies and Canadian Solar 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 Global Correlations module to find global opportunities by holding instruments from different markets.