Correlation Between SMA Solar and United Airlines
Can any of the company-specific risk be diversified away by investing in both SMA Solar and United Airlines 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 United Airlines 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 United Airlines Holdings, you can compare the effects of market volatilities on SMA Solar and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and United Airlines.
Diversification Opportunities for SMA Solar and United Airlines
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SMA and United is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of SMA Solar i.e., SMA Solar and United Airlines go up and down completely randomly.
Pair Corralation between SMA Solar and United Airlines
Assuming the 90 days trading horizon SMA Solar is expected to generate 17.25 times less return on investment than United Airlines. In addition to that, SMA Solar is 2.06 times more volatile than United Airlines Holdings. It trades about 0.01 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.26 per unit of volatility. If you would invest 9,865 in United Airlines Holdings on October 12, 2024 and sell it today you would earn a total of 1,111 from holding United Airlines Holdings or generate 11.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
SMA Solar Technology vs. United Airlines Holdings
Performance |
| Timeline |
| SMA Solar Technology |
| United Airlines Holdings |
SMA Solar and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and United Airlines
The main advantage of trading using opposite SMA Solar and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| SMA Solar vs. Golden Metal Resources | SMA Solar vs. Vienna Insurance Group | SMA Solar vs. FC Investment Trust | SMA Solar vs. Monks Investment Trust |
| United Airlines vs. Broadcom | United Airlines vs. EVS Broadcast Equipment | United Airlines vs. SMA Solar Technology | United Airlines vs. Polar Capital Technology |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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