Correlation Between SMA Solar and Ecofin Global
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Ecofin Global 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 Ecofin Global 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 Ecofin Global Utilities, you can compare the effects of market volatilities on SMA Solar and Ecofin Global 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 Ecofin Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Ecofin Global.
Diversification Opportunities for SMA Solar and Ecofin Global
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SMA and Ecofin is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Ecofin Global Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofin Global Utilities 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 Ecofin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofin Global Utilities has no effect on the direction of SMA Solar i.e., SMA Solar and Ecofin Global go up and down completely randomly.
Pair Corralation between SMA Solar and Ecofin Global
Assuming the 90 days trading horizon SMA Solar Technology is expected to generate 2.23 times more return on investment than Ecofin Global. However, SMA Solar is 2.23 times more volatile than Ecofin Global Utilities. It trades about 0.05 of its potential returns per unit of risk. Ecofin Global Utilities is currently generating about -0.07 per unit of risk. If you would invest 1,490 in SMA Solar Technology on October 11, 2024 and sell it today you would earn a total of 33.00 from holding SMA Solar Technology or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Ecofin Global Utilities
Performance |
| Timeline |
| SMA Solar Technology |
| Ecofin Global Utilities |
SMA Solar and Ecofin Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Ecofin Global
The main advantage of trading using opposite SMA Solar and Ecofin Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Ecofin Global 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 Ecofin Global will offset losses from the drop in Ecofin Global's long position.| SMA Solar vs. Cizzle Biotechnology Holdings | SMA Solar vs. Wyndham Hotels Resorts | SMA Solar vs. Bloomsbury Publishing Plc | SMA Solar vs. Cellnex Telecom SA |
| Ecofin Global vs. AcadeMedia AB | Ecofin Global vs. Ashtead Technology Holdings | Ecofin Global vs. SMA Solar Technology | Ecofin Global vs. Aptitude Software Group |
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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