Correlation Between SMA Solar and STELLA JONES
Can any of the company-specific risk be diversified away by investing in both SMA Solar and STELLA JONES 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 STELLA JONES 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 STELLA JONES INC, you can compare the effects of market volatilities on SMA Solar and STELLA JONES 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 STELLA JONES. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and STELLA JONES.
Diversification Opportunities for SMA Solar and STELLA JONES
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SMA and STELLA is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and STELLA JONES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STELLA JONES INC 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 STELLA JONES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STELLA JONES INC has no effect on the direction of SMA Solar i.e., SMA Solar and STELLA JONES go up and down completely randomly.
Pair Corralation between SMA Solar and STELLA JONES
Assuming the 90 days horizon SMA Solar Technology is expected to generate 1.91 times more return on investment than STELLA JONES. However, SMA Solar is 1.91 times more volatile than STELLA JONES INC. It trades about 0.1 of its potential returns per unit of risk. STELLA JONES INC is currently generating about 0.02 per unit of risk. If you would invest 1,381 in SMA Solar Technology on September 14, 2024 and sell it today you would earn a total of 121.00 from holding SMA Solar Technology or generate 8.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. STELLA JONES INC
Performance |
| Timeline |
| SMA Solar Technology |
| STELLA JONES INC |
SMA Solar and STELLA JONES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and STELLA JONES
The main advantage of trading using opposite SMA Solar and STELLA JONES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, STELLA JONES 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 STELLA JONES will offset losses from the drop in STELLA JONES's long position.| SMA Solar vs. Sunrun Inc | SMA Solar vs. Superior Plus Corp | SMA Solar vs. SIVERS SEMICONDUCTORS AB | SMA Solar vs. Norsk Hydro ASA |
| STELLA JONES vs. DEVRY EDUCATION GRP | STELLA JONES vs. SMA Solar Technology | STELLA JONES vs. CHINA EDUCATION GROUP | STELLA JONES vs. Micron 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Global Correlations Find global opportunities by holding instruments from different markets |