Correlation Between Array Technologies and Nextracker

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

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

Diversification Opportunities for Array Technologies and Nextracker

0.85

Correlation Coefficient

Array Technologies  Nextracker

Very poor diversification

The 3 months correlation between Array and Nextracker is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Array Technologies and Nextracker Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextracker Class A and Array 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 Array Technologies are associated (or correlated) with Nextracker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextracker Class A has no effect on the direction of Array Technologies i.e., Array Technologies and Nextracker go up and down completely randomly.

Pair Corralation between Array Technologies and Nextracker

Given the investment horizon of 90 days Array Technologies is expected to generate 1.06 times less return on investment than Nextracker. In addition to that, Array Technologies is 1.77 times more volatile than Nextracker Class A. It trades about 0.13 of its total potential returns per unit of risk. Nextracker Class A is currently generating about 0.25 per unit of volatility. If you would invest  4,061  in Nextracker Class A on April 30, 2025 and sell it today you would earn a total of  2,429  from holding Nextracker Class A or generate 59.81% return on investment over 90 days.

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

Array Technologies  vs.  Nextracker Class A

Array Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Array Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Array Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Nextracker Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nextracker Class A are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Nextracker unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Array Technologies and Nextracker

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

The idea behind Array Technologies and Nextracker Class A 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.