Correlation Between SMA Solar and Impax Asset
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Impax Asset 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 Impax Asset 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 Impax Asset Management, you can compare the effects of market volatilities on SMA Solar and Impax Asset 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 Impax Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Impax Asset.
Diversification Opportunities for SMA Solar and Impax Asset
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SMA and Impax is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Impax Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impax Asset Management 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 Impax Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impax Asset Management has no effect on the direction of SMA Solar i.e., SMA Solar and Impax Asset go up and down completely randomly.
Pair Corralation between SMA Solar and Impax Asset
Assuming the 90 days trading horizon SMA Solar Technology is expected to under-perform the Impax Asset. In addition to that, SMA Solar is 1.28 times more volatile than Impax Asset Management. It trades about -0.07 of its total potential returns per unit of risk. Impax Asset Management is currently generating about -0.07 per unit of volatility. If you would invest 69,807 in Impax Asset Management on October 12, 2024 and sell it today you would lose (48,357) from holding Impax Asset Management or give up 69.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Impax Asset Management
Performance |
| Timeline |
| SMA Solar Technology |
| Impax Asset Management |
SMA Solar and Impax Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Impax Asset
The main advantage of trading using opposite SMA Solar and Impax Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Impax Asset 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 Impax Asset will offset losses from the drop in Impax Asset's 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 |
| Impax Asset vs. SMA Solar Technology | Impax Asset vs. DXC Technology Co | Impax Asset vs. Batm Advanced Communications | Impax Asset vs. Allianz Technology Trust |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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