Correlation Between Solar Integrated and Solar Alliance
Can any of the company-specific risk be diversified away by investing in both Solar Integrated and Solar Alliance 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 Solar Integrated and Solar Alliance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solar Integrated Roofing and Solar Alliance Energy, you can compare the effects of market volatilities on Solar Integrated and Solar Alliance 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 Solar Integrated with a short position of Solar Alliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Integrated and Solar Alliance.
Diversification Opportunities for Solar Integrated and Solar Alliance
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Solar and Solar is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Solar Integrated Roofing and Solar Alliance Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solar Alliance Energy and Solar Integrated 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 Solar Integrated Roofing are associated (or correlated) with Solar Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solar Alliance Energy has no effect on the direction of Solar Integrated i.e., Solar Integrated and Solar Alliance go up and down completely randomly.
Pair Corralation between Solar Integrated and Solar Alliance
Given the investment horizon of 90 days Solar Integrated Roofing is expected to generate 7.2 times more return on investment than Solar Alliance. However, Solar Integrated is 7.2 times more volatile than Solar Alliance Energy. It trades about 0.1 of its potential returns per unit of risk. Solar Alliance Energy is currently generating about -0.12 per unit of risk. If you would invest 0.02 in Solar Integrated Roofing on August 31, 2024 and sell it today you would lose (0.01) from holding Solar Integrated Roofing or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solar Integrated Roofing vs. Solar Alliance Energy
Performance |
| Timeline |
| Solar Integrated Roofing |
| Solar Alliance Energy |
Solar Integrated and Solar Alliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solar Integrated and Solar Alliance
The main advantage of trading using opposite Solar Integrated and Solar Alliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar Integrated position performs unexpectedly, Solar Alliance 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 Solar Alliance will offset losses from the drop in Solar Alliance's long position.| Solar Integrated vs. Newhydrogen | Solar Integrated vs. Ascent Solar Technologies, | Solar Integrated vs. SinglePoint | Solar Integrated vs. TGI Solar Power |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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