Correlation Between Mass Megawat and SolarWindow Technologies

Can any of the company-specific risk be diversified away by investing in both Mass Megawat and SolarWindow Technologies 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 Mass Megawat and SolarWindow Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mass Megawat Wind and SolarWindow Technologies, you can compare the effects of market volatilities on Mass Megawat and SolarWindow Technologies 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 Mass Megawat with a short position of SolarWindow Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mass Megawat and SolarWindow Technologies.

Diversification Opportunities for Mass Megawat and SolarWindow Technologies

0.45

Correlation Coefficient

Mass Megawat  SolarWindow Technologies

Very weak diversification

The 3 months correlation between Mass and SolarWindow is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mass Megawat Wind and SolarWindow Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarWindow Technologies and Mass Megawat 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 Mass Megawat Wind are associated (or correlated) with SolarWindow Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarWindow Technologies has no effect on the direction of Mass Megawat i.e., Mass Megawat and SolarWindow Technologies go up and down completely randomly.

Pair Corralation between Mass Megawat and SolarWindow Technologies

Given the investment horizon of 90 days Mass Megawat Wind is expected to generate 1.57 times more return on investment than SolarWindow Technologies. However, Mass Megawat is 1.57 times more volatile than SolarWindow Technologies. It trades about 0.11 of its potential returns per unit of risk. SolarWindow Technologies is currently generating about 0.04 per unit of risk. If you would invest  29.00  in Mass Megawat Wind on December 29, 2024 and sell it today you would earn a total of  11.00  from holding Mass Megawat Wind or generate 37.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Mass Megawat Wind  vs.  SolarWindow Technologies

Mass Megawat Wind

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mass Megawat Wind are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Mass Megawat showed solid returns over the last few months and may actually be approaching a breakup point.

SolarWindow Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SolarWindow Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, SolarWindow Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mass Megawat and SolarWindow Technologies

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

The idea behind Mass Megawat Wind and SolarWindow Technologies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.