Correlation Between SMA Solar and Athelney Trust
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Athelney Trust 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 Athelney Trust 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 Athelney Trust plc, you can compare the effects of market volatilities on SMA Solar and Athelney Trust 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 Athelney Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Athelney Trust.
Diversification Opportunities for SMA Solar and Athelney Trust
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SMA and Athelney is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Athelney Trust plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athelney Trust 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 Athelney Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athelney Trust plc has no effect on the direction of SMA Solar i.e., SMA Solar and Athelney Trust go up and down completely randomly.
Pair Corralation between SMA Solar and Athelney Trust
Assuming the 90 days trading horizon SMA Solar Technology is expected to under-perform the Athelney Trust. In addition to that, SMA Solar is 7.34 times more volatile than Athelney Trust plc. It trades about -0.14 of its total potential returns per unit of risk. Athelney Trust plc is currently generating about 0.22 per unit of volatility. If you would invest 17,000 in Athelney Trust plc on September 4, 2024 and sell it today you would earn a total of 500.00 from holding Athelney Trust plc or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
SMA Solar Technology vs. Athelney Trust plc
Performance |
| Timeline |
| SMA Solar Technology |
| Athelney Trust plc |
SMA Solar and Athelney Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Athelney Trust
The main advantage of trading using opposite SMA Solar and Athelney Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Athelney Trust 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 Athelney Trust will offset losses from the drop in Athelney Trust's long position.| SMA Solar vs. Samsung Electronics Co | SMA Solar vs. Samsung Electronics Co | SMA Solar vs. Hyundai Motor | SMA Solar vs. Toyota Motor Corp |
| Athelney Trust vs. Kaufman Et Broad | Athelney Trust vs. Norman Broadbent Plc | Athelney Trust vs. Molson Coors Beverage | Athelney Trust vs. G5 Entertainment AB |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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