Correlation Between Box and First Solar

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

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

Diversification Opportunities for Box and First Solar

-0.35

Correlation Coefficient

Box  First Solar

Very good diversification

The 3 months correlation between Box and First is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Box Inc and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar and Box 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 Box Inc are associated (or correlated) with First Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Solar has no effect on the direction of Box i.e., Box and First Solar go up and down completely randomly.

Pair Corralation between Box and First Solar

Considering the 90-day investment horizon Box Inc is expected to under-perform the First Solar. But the stock apears to be less risky and, when comparing its historical volatility, Box Inc is 1.58 times less risky than First Solar. The stock trades about 0.0 of its potential returns per unit of risk. The First Solar is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  18,618  in First Solar on May 15, 2025 and sell it today you would lose (134.00) from holding First Solar or give up 0.72% of portfolio value over 90 days.

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

Box Inc  vs.  First Solar

Box Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days Box Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Box is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Solar

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Solar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, First Solar is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Box and First Solar

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

The idea behind Box Inc and First 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.