Correlation Between Freightcar America and Solarmax Technology
Can any of the company-specific risk be diversified away by investing in both Freightcar America and Solarmax Technology 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 Freightcar America and Solarmax Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freightcar America and Solarmax Technology Common, you can compare the effects of market volatilities on Freightcar America and Solarmax Technology 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 Freightcar America with a short position of Solarmax Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freightcar America and Solarmax Technology.
Diversification Opportunities for Freightcar America and Solarmax Technology
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Freightcar and Solarmax is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Freightcar America and Solarmax Technology Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solarmax Technology and Freightcar America 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 Freightcar America are associated (or correlated) with Solarmax Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solarmax Technology has no effect on the direction of Freightcar America i.e., Freightcar America and Solarmax Technology go up and down completely randomly.
Pair Corralation between Freightcar America and Solarmax Technology
Given the investment horizon of 90 days Freightcar America is expected to generate 0.45 times more return on investment than Solarmax Technology. However, Freightcar America is 2.22 times less risky than Solarmax Technology. It trades about 0.48 of its potential returns per unit of risk. Solarmax Technology Common is currently generating about 0.21 per unit of risk. If you would invest 883.00 in Freightcar America on October 20, 2024 and sell it today you would earn a total of 354.00 from holding Freightcar America or generate 40.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freightcar America vs. Solarmax Technology Common
Performance |
| Timeline |
| Freightcar America |
| Solarmax Technology |
Freightcar America and Solarmax Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freightcar America and Solarmax Technology
The main advantage of trading using opposite Freightcar America and Solarmax Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freightcar America position performs unexpectedly, Solarmax Technology 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 Solarmax Technology will offset losses from the drop in Solarmax Technology's long position.| Freightcar America vs. Greenbrier Companies | Freightcar America vs. LB Foster | Freightcar America vs. Westinghouse Air Brake | Freightcar America vs. CSX Corporation |
| Solarmax Technology vs. Radcom | Solarmax Technology vs. Weibo Corp | Solarmax Technology vs. Coupang LLC | Solarmax Technology vs. Arrow Electronics |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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