Correlation Between Shoals Technologies and Solar Integrated

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

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

Diversification Opportunities for Shoals Technologies and Solar Integrated

0.16

Correlation Coefficient

Shoals Technologies  Solar Integrated

Average diversification

The 3 months correlation between Shoals and Solar is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Shoals Technologies Group and Solar Integrated Roofing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solar Integrated Roofing and Shoals Technologies 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 Shoals Technologies Group are associated (or correlated) with Solar Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solar Integrated Roofing has no effect on the direction of Shoals Technologies i.e., Shoals Technologies and Solar Integrated go up and down completely randomly.

Pair Corralation between Shoals Technologies and Solar Integrated

Given the investment horizon of 90 days Shoals Technologies Group is expected to under-perform the Solar Integrated. But the stock apears to be less risky and, when comparing its historical volatility, Shoals Technologies Group is 16.93 times less risky than Solar Integrated. The stock trades about -0.09 of its potential returns per unit of risk. The Solar Integrated Roofing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Solar Integrated Roofing on September 15, 2024 and sell it today you would lose (29.99) from holding Solar Integrated Roofing or give up 99.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

Shoals Technologies Group  vs.  Solar Integrated Roofing

Shoals Technologies

Risk-Adjusted Performance

0 of 100

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Solar Integrated Roofing

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Solar Integrated Roofing are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Solar Integrated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shoals Technologies and Solar Integrated

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

The idea behind Shoals Technologies Group and Solar Integrated Roofing 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.