Correlation Between Canadian Solar and Commodity Return

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

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

Diversification Opportunities for Canadian Solar and Commodity Return

0.46

Correlation Coefficient

Canadian Solar  Commodity Return

Very weak diversification

The 3 months correlation between Canadian and Commodity is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Solar and Commodity Return Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commodity Return Strategy and Canadian 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 Canadian Solar are associated (or correlated) with Commodity Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commodity Return Strategy has no effect on the direction of Canadian Solar i.e., Canadian Solar and Commodity Return go up and down completely randomly.

Pair Corralation between Canadian Solar and Commodity Return

Given the investment horizon of 90 days Canadian Solar is expected to generate 4.74 times more return on investment than Commodity Return. However, Canadian Solar is 4.74 times more volatile than Commodity Return Strategy. It trades about 0.11 of its potential returns per unit of risk. Commodity Return Strategy is currently generating about 0.02 per unit of risk. If you would invest  918.00  in Canadian Solar on May 5, 2025 and sell it today you would earn a total of  214.00  from holding Canadian Solar or generate 23.31% return on investment over 90 days.

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

Canadian Solar  vs.  Commodity Return Strategy

Canadian Solar

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Solar are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward indicators, Canadian Solar reported solid returns over the last few months and may actually be approaching a breakup point.

Commodity Return Strategy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Commodity Return Strategy are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Commodity Return is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Canadian Solar and Commodity Return

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

The idea behind Canadian Solar and Commodity Return Strategy 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.