Correlation Between SMA Solar and London Stock
Can any of the company-specific risk be diversified away by investing in both SMA Solar and London Stock 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 London Stock 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 London Stock Exchange, you can compare the effects of market volatilities on SMA Solar and London Stock 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 London Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and London Stock.
Diversification Opportunities for SMA Solar and London Stock
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SMA and London is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and London Stock Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London Stock Exchange 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 London Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London Stock Exchange has no effect on the direction of SMA Solar i.e., SMA Solar and London Stock go up and down completely randomly.
Pair Corralation between SMA Solar and London Stock
Assuming the 90 days horizon SMA Solar Technology is expected to generate 3.01 times more return on investment than London Stock. However, SMA Solar is 3.01 times more volatile than London Stock Exchange. It trades about 0.11 of its potential returns per unit of risk. London Stock Exchange is currently generating about 0.16 per unit of risk. If you would invest 1,366 in SMA Solar Technology on September 13, 2024 and sell it today you would earn a total of 136.00 from holding SMA Solar Technology or generate 9.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. London Stock Exchange
Performance |
| Timeline |
| SMA Solar Technology |
| London Stock Exchange |
SMA Solar and London Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and London Stock
The main advantage of trading using opposite SMA Solar and London Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, London Stock 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 London Stock will offset losses from the drop in London Stock'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 |
| London Stock vs. Caseys General Stores | London Stock vs. SCIENCE IN SPORT | London Stock vs. NTG Nordic Transport | London Stock vs. Burlington Stores |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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