Correlation Between Marvell Technology and Canadian Solar

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

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

Diversification Opportunities for Marvell Technology and Canadian Solar

0.61

Correlation Coefficient

Marvell Technology  Canadian Solar

Poor diversification

The 3 months correlation between Marvell and Canadian is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology Group and Canadian Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Solar and Marvell Technology 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 Marvell Technology Group 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 Marvell Technology i.e., Marvell Technology and Canadian Solar go up and down completely randomly.

Pair Corralation between Marvell Technology and Canadian Solar

Given the investment horizon of 90 days Marvell Technology Group is expected to under-perform the Canadian Solar. In addition to that, Marvell Technology is 1.35 times more volatile than Canadian Solar. It trades about -0.16 of its total potential returns per unit of risk. Canadian Solar is currently generating about -0.05 per unit of volatility. If you would invest  1,123  in Canadian Solar on December 29, 2024 and sell it today you would lose (164.00) from holding Canadian Solar or give up 14.6% of portfolio value over 90 days.

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

Marvell Technology Group  vs.  Canadian Solar

Marvell Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marvell Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional 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 latest unfluctuating performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Marvell Technology and Canadian Solar

The main advantage of trading using opposite Marvell Technology and Canadian Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marvell Technology 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 Marvell Technology Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.