Correlation Between TGI Solar and Shoals Technologies

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

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

Diversification Opportunities for TGI Solar and Shoals Technologies

-0.17

Correlation Coefficient

TGI Solar  Shoals Technologies

Good diversification

The 3 months correlation between TGI and Shoals is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding TGI Solar Power and Shoals Technologies Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoals Technologies and TGI 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 TGI Solar Power 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 TGI Solar i.e., TGI Solar and Shoals Technologies go up and down completely randomly.

Pair Corralation between TGI Solar and Shoals Technologies

Given the investment horizon of 90 days TGI Solar Power is expected to generate 2.56 times more return on investment than Shoals Technologies. However, TGI Solar is 2.56 times more volatile than Shoals Technologies Group. It trades about 0.14 of its potential returns per unit of risk. Shoals Technologies Group is currently generating about -0.02 per unit of risk. If you would invest  0.11  in TGI Solar Power on October 25, 2024 and sell it today you would earn a total of  0.09  from holding TGI Solar Power or generate 81.82% return on investment over 90 days.

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

TGI Solar Power  vs.  Shoals Technologies Group

TGI Solar Power

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TGI Solar Power are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TGI Solar reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with TGI Solar and Shoals Technologies

The main advantage of trading using opposite TGI Solar and Shoals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TGI Solar 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 TGI Solar Power 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.