Correlation Between RTW Venture and SMA Solar
Can any of the company-specific risk be diversified away by investing in both RTW Venture 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 RTW Venture and SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RTW Venture Fund and SMA Solar Technology, you can compare the effects of market volatilities on RTW Venture 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 RTW Venture with a short position of SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of RTW Venture and SMA Solar.
Diversification Opportunities for RTW Venture and SMA Solar
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between RTW and SMA is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding RTW Venture Fund 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 RTW Venture 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 RTW Venture Fund 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 RTW Venture i.e., RTW Venture and SMA Solar go up and down completely randomly.
Pair Corralation between RTW Venture and SMA Solar
Assuming the 90 days trading horizon RTW Venture Fund is expected to generate 0.43 times more return on investment than SMA Solar. However, RTW Venture Fund is 2.32 times less risky than SMA Solar. It trades about 0.05 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.2 per unit of risk. If you would invest 135.00 in RTW Venture Fund on September 3, 2024 and sell it today you would earn a total of 14.00 from holding RTW Venture Fund or generate 10.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RTW Venture Fund vs. SMA Solar Technology
Performance |
| Timeline |
| RTW Venture Fund |
| SMA Solar Technology |
RTW Venture and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RTW Venture and SMA Solar
The main advantage of trading using opposite RTW Venture and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RTW Venture 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.| RTW Venture vs. Gaztransport et Technigaz | RTW Venture vs. Broadcom | RTW Venture vs. Empire Metals Limited | RTW Venture vs. Cornish Metals |
| SMA Solar vs. Catalyst Media Group | SMA Solar vs. CATLIN GROUP | SMA Solar vs. Magnora ASA | SMA Solar vs. RTW Venture Fund |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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