Correlation Between SMA Solar and Trellus Health
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Trellus Health 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 Trellus Health 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 Trellus Health plc, you can compare the effects of market volatilities on SMA Solar and Trellus Health 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 Trellus Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Trellus Health.
Diversification Opportunities for SMA Solar and Trellus Health
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SMA and Trellus is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Trellus Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trellus Health 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 Trellus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trellus Health plc has no effect on the direction of SMA Solar i.e., SMA Solar and Trellus Health go up and down completely randomly.
Pair Corralation between SMA Solar and Trellus Health
Assuming the 90 days trading horizon SMA Solar Technology is expected to under-perform the Trellus Health. But the stock apears to be less risky and, when comparing its historical volatility, SMA Solar Technology is 19.17 times less risky than Trellus Health. The stock trades about -0.11 of its potential returns per unit of risk. The Trellus Health plc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 160.00 in Trellus Health plc on October 25, 2024 and sell it today you would earn a total of 75.00 from holding Trellus Health plc or generate 46.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Trellus Health plc
Performance |
| Timeline |
| SMA Solar Technology |
| Trellus Health plc |
SMA Solar and Trellus Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Trellus Health
The main advantage of trading using opposite SMA Solar and Trellus Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Trellus Health 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 Trellus Health will offset losses from the drop in Trellus Health's long position.| SMA Solar vs. Toyota Motor Corp | SMA Solar vs. SoftBank Group Corp | SMA Solar vs. OTP Bank Nyrt | SMA Solar vs. ONEOK Inc |
| Trellus Health vs. SupplyMe Capital PLC | Trellus Health vs. SM Energy Co | Trellus Health vs. FuelCell Energy | Trellus Health vs. Grand Vision 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |