Correlation Between SMA Solar and URBAN OUTFITTERS
Can any of the company-specific risk be diversified away by investing in both SMA Solar and URBAN OUTFITTERS 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 URBAN OUTFITTERS 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 URBAN OUTFITTERS, you can compare the effects of market volatilities on SMA Solar and URBAN OUTFITTERS 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 URBAN OUTFITTERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and URBAN OUTFITTERS.
Diversification Opportunities for SMA Solar and URBAN OUTFITTERS
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SMA and URBAN is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and URBAN OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URBAN OUTFITTERS 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 URBAN OUTFITTERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URBAN OUTFITTERS has no effect on the direction of SMA Solar i.e., SMA Solar and URBAN OUTFITTERS go up and down completely randomly.
Pair Corralation between SMA Solar and URBAN OUTFITTERS
Assuming the 90 days horizon SMA Solar is expected to generate 1.43 times less return on investment than URBAN OUTFITTERS. In addition to that, SMA Solar is 1.95 times more volatile than URBAN OUTFITTERS. It trades about 0.11 of its total potential returns per unit of risk. URBAN OUTFITTERS is currently generating about 0.31 per unit of volatility. If you would invest 4,800 in URBAN OUTFITTERS on October 1, 2024 and sell it today you would earn a total of 500.00 from holding URBAN OUTFITTERS or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. URBAN OUTFITTERS
Performance |
| Timeline |
| SMA Solar Technology |
| URBAN OUTFITTERS |
SMA Solar and URBAN OUTFITTERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and URBAN OUTFITTERS
The main advantage of trading using opposite SMA Solar and URBAN OUTFITTERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, URBAN OUTFITTERS 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 URBAN OUTFITTERS will offset losses from the drop in URBAN OUTFITTERS's long position.| SMA Solar vs. First Solar | SMA Solar vs. Xinyi Solar Holdings | SMA Solar vs. Sunrun Inc | SMA Solar vs. SMA SOLAR T |
| URBAN OUTFITTERS vs. ALERION CLEANPOWER | URBAN OUTFITTERS vs. SCANSOURCE | URBAN OUTFITTERS vs. CVW CLEANTECH INC | URBAN OUTFITTERS vs. Ribbon Communications |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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