Correlation Between London Stock and SMA Solar
Can any of the company-specific risk be diversified away by investing in both London Stock 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 London Stock and SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Stock Exchange and SMA Solar Technology, you can compare the effects of market volatilities on London Stock 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 London Stock with a short position of SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Stock and SMA Solar.
Diversification Opportunities for London Stock and SMA Solar
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between London and SMA is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding London Stock Exchange 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 London Stock 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 London Stock Exchange 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 London Stock i.e., London Stock and SMA Solar go up and down completely randomly.
Pair Corralation between London Stock and SMA Solar
Assuming the 90 days trading horizon London Stock Exchange is expected to generate 0.45 times more return on investment than SMA Solar. However, London Stock Exchange is 2.25 times less risky than SMA Solar. It trades about 0.14 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.01 per unit of risk. If you would invest 12,100 in London Stock Exchange on September 13, 2024 and sell it today you would earn a total of 1,400 from holding London Stock Exchange or generate 11.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
London Stock Exchange vs. SMA Solar Technology
Performance |
| Timeline |
| London Stock Exchange |
| SMA Solar Technology |
London Stock and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Stock and SMA Solar
The main advantage of trading using opposite London Stock and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Stock 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.| London Stock vs. Caseys General Stores | London Stock vs. SCIENCE IN SPORT | London Stock vs. NTG Nordic Transport | London Stock vs. Burlington Stores |
| SMA Solar vs. Hochschild Mining plc | SMA Solar vs. CI GAMES SA | SMA Solar vs. GAMESTOP | SMA Solar vs. International Game Technology |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Stocks Directory Find actively traded stocks across global markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| CEOs Directory Screen CEOs from public companies around the world |