Correlation Between SolarEdge Technologies and SMA Solar
Can any of the company-specific risk be diversified away by investing in both SolarEdge Technologies and SMA Solar 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 SolarEdge Technologies and SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SolarEdge Technologies and SMA Solar Technology, you can compare the effects of market volatilities on SolarEdge Technologies and SMA Solar 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 SolarEdge Technologies with a short position of SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolarEdge Technologies and SMA Solar.
Diversification Opportunities for SolarEdge Technologies and SMA Solar
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SolarEdge and SMA is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SolarEdge Technologies and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology and SolarEdge Technologies 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 SolarEdge Technologies are associated (or correlated) with SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of SolarEdge Technologies i.e., SolarEdge Technologies and SMA Solar go up and down completely randomly.
Pair Corralation between SolarEdge Technologies and SMA Solar
Assuming the 90 days horizon SolarEdge Technologies is expected to generate 1.72 times more return on investment than SMA Solar. However, SolarEdge Technologies is 1.72 times more volatile than SMA Solar Technology. It trades about -0.13 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.25 per unit of risk. If you would invest 2,481 in SolarEdge Technologies on August 27, 2024 and sell it today you would lose (1,319) from holding SolarEdge Technologies or give up 53.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolarEdge Technologies vs. SMA Solar Technology
Performance |
| Timeline |
| SolarEdge Technologies |
| SMA Solar Technology |
SolarEdge Technologies and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolarEdge Technologies and SMA Solar
The main advantage of trading using opposite SolarEdge Technologies and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolarEdge Technologies position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| SolarEdge Technologies vs. Meli Hotels International | SolarEdge Technologies vs. INTERCONT HOTELS | SolarEdge Technologies vs. Host Hotels Resorts | SolarEdge Technologies vs. MEDICAL FACILITIES NEW |
| SMA Solar vs. Superior Plus Corp | SMA Solar vs. Origin Agritech | SMA Solar vs. Identiv | SMA Solar vs. INTUITIVE SURGICAL |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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