Correlation Between SMA Solar and CDL INVESTMENT
Can any of the company-specific risk be diversified away by investing in both SMA Solar and CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT, you can compare the effects of market volatilities on SMA Solar and CDL INVESTMENT 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 CDL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and CDL INVESTMENT.
Diversification Opportunities for SMA Solar and CDL INVESTMENT
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between SMA and CDL is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and CDL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDL INVESTMENT 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 CDL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDL INVESTMENT has no effect on the direction of SMA Solar i.e., SMA Solar and CDL INVESTMENT go up and down completely randomly.
Pair Corralation between SMA Solar and CDL INVESTMENT
Assuming the 90 days trading horizon SMA Solar Technology is expected to generate 3.41 times more return on investment than CDL INVESTMENT. However, SMA Solar is 3.41 times more volatile than CDL INVESTMENT. It trades about 0.07 of its potential returns per unit of risk. CDL INVESTMENT is currently generating about 0.08 per unit of risk. If you would invest 1,382 in SMA Solar Technology on September 14, 2024 and sell it today you would earn a total of 69.00 from holding SMA Solar Technology or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. CDL INVESTMENT
Performance |
| Timeline |
| SMA Solar Technology |
| CDL INVESTMENT |
SMA Solar and CDL INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and CDL INVESTMENT
The main advantage of trading using opposite SMA Solar and CDL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, CDL INVESTMENT 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 CDL INVESTMENT will offset losses from the drop in CDL INVESTMENT's long position.| SMA Solar vs. VIVA WINE GROUP | SMA Solar vs. Data3 Limited | SMA Solar vs. National Storage Affiliates | SMA Solar vs. Public Storage |
| CDL INVESTMENT vs. Apple Inc | CDL INVESTMENT vs. Apple Inc | CDL INVESTMENT vs. Apple Inc | CDL INVESTMENT vs. Apple Inc |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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