Correlation Between SMA Solar and Penn National
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Penn National 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 Penn National 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 Penn National Gaming, you can compare the effects of market volatilities on SMA Solar and Penn National 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 Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Penn National.
Diversification Opportunities for SMA Solar and Penn National
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SMA and Penn is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming 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 Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of SMA Solar i.e., SMA Solar and Penn National go up and down completely randomly.
Pair Corralation between SMA Solar and Penn National
Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the Penn National. In addition to that, SMA Solar is 1.12 times more volatile than Penn National Gaming. It trades about -0.06 of its total potential returns per unit of risk. Penn National Gaming is currently generating about -0.01 per unit of volatility. If you would invest 2,908 in Penn National Gaming on October 11, 2024 and sell it today you would lose (1,032) from holding Penn National Gaming or give up 35.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Penn National Gaming
Performance |
| Timeline |
| SMA Solar Technology |
| Penn National Gaming |
SMA Solar and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Penn National
The main advantage of trading using opposite SMA Solar and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Penn National 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 Penn National will offset losses from the drop in Penn National's long position.| SMA Solar vs. De Grey Mining | SMA Solar vs. Austevoll Seafood ASA | SMA Solar vs. Yanzhou Coal Mining | SMA Solar vs. Ebro Foods SA |
| Penn National vs. THRACE PLASTICS | Penn National vs. AM EAGLE OUTFITTERS | Penn National vs. NEWELL RUBBERMAID | Penn National vs. VIENNA INSURANCE GR |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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