Correlation Between SMA Solar and Cross Country
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Cross Country 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 Cross Country 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 Cross Country Healthcare, you can compare the effects of market volatilities on SMA Solar and Cross Country 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 Cross Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Cross Country.
Diversification Opportunities for SMA Solar and Cross Country
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SMA and Cross is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Cross Country Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cross Country Healthcare 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 Cross Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cross Country Healthcare has no effect on the direction of SMA Solar i.e., SMA Solar and Cross Country go up and down completely randomly.
Pair Corralation between SMA Solar and Cross Country
Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the Cross Country. In addition to that, SMA Solar is 1.15 times more volatile than Cross Country Healthcare. It trades about -0.09 of its total potential returns per unit of risk. Cross Country Healthcare is currently generating about -0.01 per unit of volatility. If you would invest 1,040 in Cross Country Healthcare on September 2, 2024 and sell it today you would lose (30.00) from holding Cross Country Healthcare or give up 2.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Cross Country Healthcare
Performance |
| Timeline |
| SMA Solar Technology |
| Cross Country Healthcare |
SMA Solar and Cross Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Cross Country
The main advantage of trading using opposite SMA Solar and Cross Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Cross Country 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 Cross Country will offset losses from the drop in Cross Country's 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 |
| Cross Country vs. SMA Solar Technology | Cross Country vs. Align Technology | Cross Country vs. Micron Technology | Cross Country vs. Transportadora de Gas |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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