Correlation Between SMA Solar and Waste Management
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on SMA Solar and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Waste Management.
Diversification Opportunities for SMA Solar and Waste Management
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SMA and Waste is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of SMA Solar i.e., SMA Solar and Waste Management go up and down completely randomly.
Pair Corralation between SMA Solar and Waste Management
Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the Waste Management. In addition to that, SMA Solar is 3.23 times more volatile than Waste Management. It trades about -0.14 of its total potential returns per unit of risk. Waste Management is currently generating about 0.1 per unit of volatility. If you would invest 15,859 in Waste Management on September 4, 2024 and sell it today you would earn a total of 5,576 from holding Waste Management or generate 35.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Waste Management
Performance |
| Timeline |
| SMA Solar Technology |
| Waste Management |
SMA Solar and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Waste Management
The main advantage of trading using opposite SMA Solar and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| SMA Solar vs. Hyatt Hotels | SMA Solar vs. Meli Hotels International | SMA Solar vs. Xenia Hotels Resorts | SMA Solar vs. ANTA SPORTS PRODUCT |
| Waste Management vs. TOTAL GABON | Waste Management vs. Walgreens Boots Alliance | Waste Management vs. Peak Resources Limited |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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