Correlation Between Canadian Solar and Simplify Managed

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

By analyzing existing cross correlation between Canadian Solar and Simplify Managed Futures, you can compare the effects of market volatilities on Canadian Solar and Simplify Managed 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 Simplify Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Solar and Simplify Managed.

Diversification Opportunities for Canadian Solar and Simplify Managed

0.22

Correlation Coefficient

Canadian Solar  Simplify Managed

Modest diversification

The 3 months correlation between Canadian and Simplify is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Solar and Simplify Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Managed Futures 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 Simplify Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Managed Futures has no effect on the direction of Canadian Solar i.e., Canadian Solar and Simplify Managed go up and down completely randomly.

Pair Corralation between Canadian Solar and Simplify Managed

Given the investment horizon of 90 days Canadian Solar is expected to generate 5.25 times more return on investment than Simplify Managed. However, Canadian Solar is 5.25 times more volatile than Simplify Managed Futures. It trades about 0.13 of its potential returns per unit of risk. Simplify Managed Futures is currently generating about 0.01 per unit of risk. If you would invest  982.00  in Canadian Solar on April 28, 2025 and sell it today you would earn a total of  293.00  from holding Canadian Solar or generate 29.84% return on investment over 90 days.

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

Canadian Solar  vs.  Simplify Managed Futures

Canadian Solar

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Solar are ranked lower than 9 (%) 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.

Simplify Managed Futures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simplify Managed Futures has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Simplify Managed is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Canadian Solar and Simplify Managed

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

The idea behind Canadian Solar and Simplify Managed Futures 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.