Correlation Between Canadian Solar and Value Fund

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

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

Diversification Opportunities for Canadian Solar and Value Fund

0.76

Correlation Coefficient

Canadian Solar  Value Fund

Poor diversification

The 3 months correlation between Canadian and Value is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Solar and Value Fund Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Fund Value 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 Value Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Fund Value has no effect on the direction of Canadian Solar i.e., Canadian Solar and Value Fund go up and down completely randomly.

Pair Corralation between Canadian Solar and Value Fund

Given the investment horizon of 90 days Canadian Solar is expected to under-perform the Value Fund. In addition to that, Canadian Solar is 3.14 times more volatile than Value Fund Value. It trades about -0.23 of its total potential returns per unit of risk. Value Fund Value is currently generating about -0.13 per unit of volatility. If you would invest  5,256  in Value Fund Value on May 14, 2025 and sell it today you would lose (126.00) from holding Value Fund Value or give up 2.4% of portfolio value over 90 days.

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

Canadian Solar  vs.  Value Fund Value

Canadian Solar

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Solar are ranked lower than 6 (%) 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.

Value Fund Value

Risk-Adjusted Performance

Weakest

Over the last 90 days Value Fund Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Value Fund 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 Value Fund

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

The idea behind Canadian Solar and Value Fund Value 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.