Correlation Between Caseys General and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Caseys General 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 Caseys General and SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caseys General Stores and SMA Solar Technology, you can compare the effects of market volatilities on Caseys General 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 Caseys General with a short position of SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and SMA Solar.
Diversification Opportunities for Caseys General and SMA Solar
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caseys and SMA is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores 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 Caseys General 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 Caseys General Stores 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 Caseys General i.e., Caseys General and SMA Solar go up and down completely randomly.
Pair Corralation between Caseys General and SMA Solar
Assuming the 90 days trading horizon Caseys General Stores is expected to under-perform the SMA Solar. But the stock apears to be less risky and, when comparing its historical volatility, Caseys General Stores is 3.3 times less risky than SMA Solar. The stock trades about -0.03 of its potential returns per unit of risk. The SMA Solar Technology is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,179 in SMA Solar Technology on September 23, 2024 and sell it today you would earn a total of 140.00 from holding SMA Solar Technology or generate 11.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. SMA Solar Technology
Performance |
| Timeline |
| Caseys General Stores |
| SMA Solar Technology |
Caseys General and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and SMA Solar
The main advantage of trading using opposite Caseys General and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General 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.| Caseys General vs. Xenia Hotels Resorts | Caseys General vs. Flutter Entertainment PLC | Caseys General vs. Dave Busters Entertainment | Caseys General vs. ZINC MEDIA GR |
| SMA Solar vs. First Solar | SMA Solar vs. SolarEdge Technologies | SMA Solar vs. Xinyi Solar Holdings | SMA Solar vs. Sunrun Inc |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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