Correlation Between Nextracker and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Nextracker 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 Nextracker and SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextracker Class A and SMA Solar Technology, you can compare the effects of market volatilities on Nextracker 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 Nextracker with a short position of SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextracker and SMA Solar.
Diversification Opportunities for Nextracker and SMA Solar
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nextracker and SMA is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Nextracker Class A 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 Nextracker 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 Nextracker Class A 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 Nextracker i.e., Nextracker and SMA Solar go up and down completely randomly.
Pair Corralation between Nextracker and SMA Solar
Considering the 90-day investment horizon Nextracker Class A is expected to generate 0.85 times more return on investment than SMA Solar. However, Nextracker Class A is 1.18 times less risky than SMA Solar. It trades about 0.3 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 3,944 in Nextracker Class A on November 4, 2024 and sell it today you would earn a total of 1,115 from holding Nextracker Class A or generate 28.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Nextracker Class A vs. SMA Solar Technology
Performance |
| Timeline |
| Nextracker Class A |
| SMA Solar Technology |
Nextracker and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextracker and SMA Solar
The main advantage of trading using opposite Nextracker and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextracker 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.| Nextracker vs. Estee Lauder Companies | Nextracker vs. Procter Gamble | Nextracker vs. Skechers USA | Nextracker vs. Rocky Brands |
| SMA Solar vs. ClearVue Technologies Limited | SMA Solar vs. Xinyi Solar Holdings | SMA Solar vs. Meyer Burger Technology | SMA Solar vs. Go Solar USA |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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