Correlation Between Commercial Vehicle and SolarEdge Technologies
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle and SolarEdge Technologies 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 Commercial Vehicle and SolarEdge Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Vehicle Group and SolarEdge Technologies, you can compare the effects of market volatilities on Commercial Vehicle and SolarEdge Technologies 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 Commercial Vehicle with a short position of SolarEdge Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and SolarEdge Technologies.
Diversification Opportunities for Commercial Vehicle and SolarEdge Technologies
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Commercial and SolarEdge is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and SolarEdge Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarEdge Technologies and Commercial Vehicle 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 Commercial Vehicle Group are associated (or correlated) with SolarEdge Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarEdge Technologies has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and SolarEdge Technologies go up and down completely randomly.
Pair Corralation between Commercial Vehicle and SolarEdge Technologies
Assuming the 90 days trading horizon Commercial Vehicle is expected to generate 12.86 times less return on investment than SolarEdge Technologies. But when comparing it to its historical volatility, Commercial Vehicle Group is 2.54 times less risky than SolarEdge Technologies. It trades about 0.01 of its potential returns per unit of risk. SolarEdge Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,192 in SolarEdge Technologies on September 15, 2024 and sell it today you would earn a total of 80.00 from holding SolarEdge Technologies or generate 6.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. SolarEdge Technologies
Performance |
| Timeline |
| Commercial Vehicle |
| SolarEdge Technologies |
Commercial Vehicle and SolarEdge Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and SolarEdge Technologies
The main advantage of trading using opposite Commercial Vehicle and SolarEdge Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle position performs unexpectedly, SolarEdge Technologies 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 SolarEdge Technologies will offset losses from the drop in SolarEdge Technologies' long position.| Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc |
| SolarEdge Technologies vs. Commercial Vehicle Group | SolarEdge Technologies vs. Collins Foods Limited | SolarEdge Technologies vs. MOLSON RS BEVERAGE | SolarEdge Technologies vs. Cal Maine Foods |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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