Correlation Between SMA Solar and United States
Can any of the company-specific risk be diversified away by investing in both SMA Solar and United States 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 United States 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 United States Steel, you can compare the effects of market volatilities on SMA Solar and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and United States.
Diversification Opportunities for SMA Solar and United States
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SMA and United is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of SMA Solar i.e., SMA Solar and United States go up and down completely randomly.
Pair Corralation between SMA Solar and United States
Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the United States. In addition to that, SMA Solar is 1.55 times more volatile than United States Steel. It trades about -0.2 of its total potential returns per unit of risk. United States Steel is currently generating about 0.03 per unit of volatility. If you would invest 3,514 in United States Steel on September 2, 2024 and sell it today you would earn a total of 276.00 from holding United States Steel or generate 7.85% 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. United States Steel
Performance |
| Timeline |
| SMA Solar Technology |
| United States Steel |
SMA Solar and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and United States
The main advantage of trading using opposite SMA Solar and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' 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 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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