Correlation Between Array Technologies and Shoals Technologies

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

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

Diversification Opportunities for Array Technologies and Shoals Technologies

0.51

Correlation Coefficient

Array Technologies  Shoals Technologies

Very weak diversification

The 3 months correlation between Array and Shoals is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Array Technologies and Shoals Technologies Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoals Technologies 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 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 Array Technologies i.e., Array Technologies and Shoals Technologies go up and down completely randomly.

Pair Corralation between Array Technologies and Shoals Technologies

Given the investment horizon of 90 days Array Technologies is expected to under-perform the Shoals Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Array Technologies is 1.15 times less risky than Shoals Technologies. The stock trades about -0.05 of its potential returns per unit of risk. The Shoals Technologies Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  472.00  in Shoals Technologies Group on May 17, 2025 and sell it today you would lose (13.00) from holding Shoals Technologies Group or give up 2.75% of portfolio value over 90 days.

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

Array Technologies  vs.  Shoals Technologies Group

Array Technologies

Risk-Adjusted Performance

Weakest

Over the last 90 days Array Technologies 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 basic indicators remain fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Shoals Technologies

Risk-Adjusted Performance

Weakest

Compared to the overall equity markets, risk-adjusted returns on investments in Shoals Technologies Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Shoals Technologies is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Array Technologies and Shoals Technologies

The main advantage of trading using opposite Array Technologies and Shoals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Array Technologies 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 Array Technologies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.