Correlation Between Canadian Solar and ProShares Short

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

By analyzing existing cross correlation between Canadian Solar and ProShares Short SmallCap600, you can compare the effects of market volatilities on Canadian Solar and ProShares Short 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 ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Solar and ProShares Short.

Diversification Opportunities for Canadian Solar and ProShares Short

-0.71

Correlation Coefficient

Canadian Solar  ProShares Short

Pay attention - limited upside

The 3 months correlation between Canadian and ProShares is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Solar and ProShares Short SmallCap600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Smal 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 ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short Smal has no effect on the direction of Canadian Solar i.e., Canadian Solar and ProShares Short go up and down completely randomly.

Pair Corralation between Canadian Solar and ProShares Short

Given the investment horizon of 90 days Canadian Solar is expected to under-perform the ProShares Short. In addition to that, Canadian Solar is 3.24 times more volatile than ProShares Short SmallCap600. It trades about -0.02 of its total potential returns per unit of risk. ProShares Short SmallCap600 is currently generating about 0.0 per unit of volatility. If you would invest  1,571  in ProShares Short SmallCap600 on April 30, 2025 and sell it today you would lose (101.00) from holding ProShares Short SmallCap600 or give up 6.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Canadian Solar  vs.  ProShares Short SmallCap600

Canadian Solar

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Solar are ranked lower than 12 (%) 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.

ProShares Short Smal

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Short SmallCap600 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Canadian Solar and ProShares Short

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

The idea behind Canadian Solar and ProShares Short SmallCap600 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.