Correlation Between SOL SP500ESG and SOL IHS
Can any of the company-specific risk be diversified away by investing in both SOL SP500ESG and SOL IHS 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 SOL SP500ESG and SOL IHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOL SP500ESG and SOL IHS Markit, you can compare the effects of market volatilities on SOL SP500ESG and SOL IHS 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 SOL SP500ESG with a short position of SOL IHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOL SP500ESG and SOL IHS.
Diversification Opportunities for SOL SP500ESG and SOL IHS
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SOL and SOL is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SOL SP500ESG and SOL IHS Markit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOL IHS Markit and SOL SP500ESG 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 SOL SP500ESG are associated (or correlated) with SOL IHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOL IHS Markit has no effect on the direction of SOL SP500ESG i.e., SOL SP500ESG and SOL IHS go up and down completely randomly.
Pair Corralation between SOL SP500ESG and SOL IHS
Assuming the 90 days trading horizon SOL SP500ESG is expected to under-perform the SOL IHS. But the etf apears to be less risky and, when comparing its historical volatility, SOL SP500ESG is 1.38 times less risky than SOL IHS. The etf trades about -0.03 of its potential returns per unit of risk. The SOL IHS Markit is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,151,500 in SOL IHS Markit on October 24, 2024 and sell it today you would earn a total of 32,000 from holding SOL IHS Markit or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOL SP500ESG vs. SOL IHS Markit
Performance |
| Timeline |
| SOL SP500ESG |
| SOL IHS Markit |
SOL SP500ESG and SOL IHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOL SP500ESG and SOL IHS
The main advantage of trading using opposite SOL SP500ESG and SOL IHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOL SP500ESG position performs unexpectedly, SOL IHS 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 SOL IHS will offset losses from the drop in SOL IHS's long position.| SOL SP500ESG vs. SOL KRX Climate | SOL SP500ESG vs. SOL K Global Semiconductor | SOL SP500ESG vs. SOL TOP5 Blended | SOL SP500ESG vs. SOL Total Bond |
| SOL IHS vs. SOL KRX Climate | SOL IHS vs. SOL K Global Semiconductor | SOL IHS vs. SOL TOP5 Blended | SOL IHS vs. SOL SP500ESG |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Stocks Directory Find actively traded stocks across global markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |