Correlation Between SMA Solar and Insteel Industries
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Insteel Industries 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 Insteel Industries 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 Insteel Industries, you can compare the effects of market volatilities on SMA Solar and Insteel Industries 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 Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Insteel Industries.
Diversification Opportunities for SMA Solar and Insteel Industries
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between SMA and Insteel is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries 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 Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of SMA Solar i.e., SMA Solar and Insteel Industries go up and down completely randomly.
Pair Corralation between SMA Solar and Insteel Industries
Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the Insteel Industries. In addition to that, SMA Solar is 1.86 times more volatile than Insteel Industries. It trades about -0.2 of its total potential returns per unit of risk. Insteel Industries is currently generating about 0.01 per unit of volatility. If you would invest 2,891 in Insteel Industries on September 2, 2024 and sell it today you would lose (51.00) from holding Insteel Industries or give up 1.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Insteel Industries
Performance |
| Timeline |
| SMA Solar Technology |
| Insteel Industries |
SMA Solar and Insteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Insteel Industries
The main advantage of trading using opposite SMA Solar and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Insteel Industries 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 Insteel Industries will offset losses from the drop in Insteel Industries' long position.| SMA Solar vs. Ming Le Sports | SMA Solar vs. Columbia Sportswear | SMA Solar vs. CVW CLEANTECH INC | SMA Solar vs. CHINA TONTINE WINES |
| Insteel Industries vs. SIVERS SEMICONDUCTORS AB | Insteel Industries vs. Darden Restaurants | Insteel Industries vs. Reliance Steel Aluminum | Insteel Industries vs. Q2M Managementberatung AG |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |