Correlation Between SolarEdge Technologies and Small Cap
Can any of the company-specific risk be diversified away by investing in both SolarEdge Technologies and Small Cap 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 SolarEdge Technologies and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SolarEdge Technologies and Small Cap Core, you can compare the effects of market volatilities on SolarEdge Technologies and Small Cap 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 SolarEdge Technologies with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolarEdge Technologies and Small Cap.
Diversification Opportunities for SolarEdge Technologies and Small Cap
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SolarEdge and Small is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SolarEdge Technologies and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core and SolarEdge Technologies 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 SolarEdge Technologies are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of SolarEdge Technologies i.e., SolarEdge Technologies and Small Cap go up and down completely randomly.
Pair Corralation between SolarEdge Technologies and Small Cap
Given the investment horizon of 90 days SolarEdge Technologies is expected to under-perform the Small Cap. In addition to that, SolarEdge Technologies is 4.32 times more volatile than Small Cap Core. It trades about -0.14 of its total potential returns per unit of risk. Small Cap Core is currently generating about 0.06 per unit of volatility. If you would invest 1,293 in Small Cap Core on August 27, 2024 and sell it today you would earn a total of 193.00 from holding Small Cap Core or generate 14.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolarEdge Technologies vs. Small Cap Core
Performance |
| Timeline |
| SolarEdge Technologies |
| Small Cap Core |
SolarEdge Technologies and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolarEdge Technologies and Small Cap
The main advantage of trading using opposite SolarEdge Technologies and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolarEdge Technologies position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| SolarEdge Technologies vs. First Solar | SolarEdge Technologies vs. Sunrun Inc | SolarEdge Technologies vs. Canadian Solar | SolarEdge Technologies vs. Enphase Energy |
| Small Cap vs. Pace High Yield | Small Cap vs. Needham Aggressive Growth | Small Cap vs. Metropolitan West High | Small Cap vs. Pioneer High Income |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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