Correlation Between SMA Solar and Admiral Group
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Admiral Group 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 Admiral Group 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 Admiral Group PLC, you can compare the effects of market volatilities on SMA Solar and Admiral Group 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 Admiral Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Admiral Group.
Diversification Opportunities for SMA Solar and Admiral Group
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SMA and Admiral is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Admiral Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Admiral Group PLC 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 Admiral Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Admiral Group PLC has no effect on the direction of SMA Solar i.e., SMA Solar and Admiral Group go up and down completely randomly.
Pair Corralation between SMA Solar and Admiral Group
Assuming the 90 days trading horizon SMA Solar Technology is expected to generate 2.93 times more return on investment than Admiral Group. However, SMA Solar is 2.93 times more volatile than Admiral Group PLC. It trades about 0.07 of its potential returns per unit of risk. Admiral Group PLC is currently generating about 0.14 per unit of risk. If you would invest 1,383 in SMA Solar Technology on September 14, 2024 and sell it today you would earn a total of 70.00 from holding SMA Solar Technology or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Admiral Group PLC
Performance |
| Timeline |
| SMA Solar Technology |
| Admiral Group PLC |
SMA Solar and Admiral Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Admiral Group
The main advantage of trading using opposite SMA Solar and Admiral Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Admiral Group 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 Admiral Group will offset losses from the drop in Admiral Group's long position.| SMA Solar vs. Europa Metals | SMA Solar vs. Gaming Realms plc | SMA Solar vs. Games Workshop Group | SMA Solar vs. Central Asia Metals |
| Admiral Group vs. MediaZest plc | Admiral Group vs. SMA Solar Technology | Admiral Group vs. Everyman Media Group | Admiral Group vs. Centaur Media |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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