Correlation Between SMA Solar and HYDROFARM HLD
Can any of the company-specific risk be diversified away by investing in both SMA Solar and HYDROFARM HLD 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 SMA Solar and HYDROFARM HLD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and HYDROFARM HLD GRP, you can compare the effects of market volatilities on SMA Solar and HYDROFARM HLD 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 SMA Solar with a short position of HYDROFARM HLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and HYDROFARM HLD.
Diversification Opportunities for SMA Solar and HYDROFARM HLD
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SMA and HYDROFARM is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and HYDROFARM HLD GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYDROFARM HLD GRP and SMA Solar 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 SMA Solar Technology are associated (or correlated) with HYDROFARM HLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYDROFARM HLD GRP has no effect on the direction of SMA Solar i.e., SMA Solar and HYDROFARM HLD go up and down completely randomly.
Pair Corralation between SMA Solar and HYDROFARM HLD
Assuming the 90 days horizon SMA Solar Technology is expected to generate 0.71 times more return on investment than HYDROFARM HLD. However, SMA Solar Technology is 1.41 times less risky than HYDROFARM HLD. It trades about 0.04 of its potential returns per unit of risk. HYDROFARM HLD GRP is currently generating about 0.0 per unit of risk. If you would invest 1,419 in SMA Solar Technology on October 25, 2024 and sell it today you would earn a total of 16.00 from holding SMA Solar Technology or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. HYDROFARM HLD GRP
Performance |
| Timeline |
| SMA Solar Technology |
| HYDROFARM HLD GRP |
SMA Solar and HYDROFARM HLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and HYDROFARM HLD
The main advantage of trading using opposite SMA Solar and HYDROFARM HLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, HYDROFARM HLD 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 HYDROFARM HLD will offset losses from the drop in HYDROFARM HLD's long position.| SMA Solar vs. CALTAGIRONE EDITORE | SMA Solar vs. InterContinental Hotels Group | SMA Solar vs. Xenia Hotels Resorts | SMA Solar vs. The Japan Steel |
| HYDROFARM HLD vs. Entravision Communications | HYDROFARM HLD vs. Align Technology | HYDROFARM HLD vs. SMA Solar Technology | HYDROFARM HLD vs. Grupo Carso SAB |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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