Correlation Between SMA Solar and Cars
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Cars 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 SMA Solar and Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Cars Inc, you can compare the effects of market volatilities on SMA Solar and Cars 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 SMA Solar with a short position of Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Cars.
Diversification Opportunities for SMA Solar and Cars
Significant diversification
The 3 months correlation between SMA and Cars is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and SMA 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 SMA Solar Technology are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of SMA Solar i.e., SMA Solar and Cars go up and down completely randomly.
Pair Corralation between SMA Solar and Cars
Assuming the 90 days trading horizon SMA Solar Technology is expected to generate 1.49 times more return on investment than Cars. However, SMA Solar is 1.49 times more volatile than Cars Inc. It trades about 0.13 of its potential returns per unit of risk. Cars Inc is currently generating about -0.36 per unit of risk. If you would invest 1,270 in SMA Solar Technology on September 26, 2024 and sell it today you would earn a total of 125.00 from holding SMA Solar Technology or generate 9.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 72.73% |
Values | Daily Returns |
SMA Solar Technology vs. Cars Inc
Performance |
Timeline |
SMA Solar Technology |
Cars Inc |
SMA Solar and Cars Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SMA Solar and Cars
The main advantage of trading using opposite SMA Solar and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.SMA Solar vs. Uniper SE | SMA Solar vs. Mulberry Group PLC | SMA Solar vs. London Security Plc | SMA Solar vs. Triad Group PLC |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |