Correlation Between Deutsche Börse and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Deutsche Börse 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 Deutsche Börse and SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Brse AG and SMA Solar Technology, you can compare the effects of market volatilities on Deutsche Börse 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 Deutsche Börse with a short position of SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Börse and SMA Solar.
Diversification Opportunities for Deutsche Börse and SMA Solar
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Deutsche and SMA is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Brse AG 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 Deutsche Börse 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 Deutsche Brse AG 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 Deutsche Börse i.e., Deutsche Börse and SMA Solar go up and down completely randomly.
Pair Corralation between Deutsche Börse and SMA Solar
Assuming the 90 days horizon Deutsche Brse AG is expected to generate 0.28 times more return on investment than SMA Solar. However, Deutsche Brse AG is 3.56 times less risky than SMA Solar. It trades about 0.35 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.09 per unit of risk. If you would invest 22,280 in Deutsche Brse AG on November 3, 2024 and sell it today you would earn a total of 1,580 from holding Deutsche Brse AG or generate 7.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Brse AG vs. SMA Solar Technology
Performance |
| Timeline |
| Deutsche Brse AG |
| SMA Solar Technology |
Deutsche Börse and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Börse and SMA Solar
The main advantage of trading using opposite Deutsche Börse and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Börse 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.| Deutsche Börse vs. CAL MAINE FOODS | Deutsche Börse vs. Lifeway Foods | Deutsche Börse vs. SLR Investment Corp | Deutsche Börse vs. MidCap Financial Investment |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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