Correlation Between Solid Power and Allison Transmission
Can any of the company-specific risk be diversified away by investing in both Solid Power and Allison Transmission 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 Solid Power and Allison Transmission into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solid Power and Allison Transmission Holdings, you can compare the effects of market volatilities on Solid Power and Allison Transmission 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 Solid Power with a short position of Allison Transmission. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solid Power and Allison Transmission.
Diversification Opportunities for Solid Power and Allison Transmission
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Solid and Allison is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Solid Power and Allison Transmission Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allison Transmission and Solid Power 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 Solid Power are associated (or correlated) with Allison Transmission. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allison Transmission has no effect on the direction of Solid Power i.e., Solid Power and Allison Transmission go up and down completely randomly.
Pair Corralation between Solid Power and Allison Transmission
Assuming the 90 days horizon Solid Power is expected to generate 16.78 times less return on investment than Allison Transmission. In addition to that, Solid Power is 5.59 times more volatile than Allison Transmission Holdings. It trades about 0.0 of its total potential returns per unit of risk. Allison Transmission Holdings is currently generating about 0.23 per unit of volatility. If you would invest 7,431 in Allison Transmission Holdings on August 30, 2024 and sell it today you would earn a total of 4,427 from holding Allison Transmission Holdings or generate 59.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solid Power vs. Allison Transmission Holdings
Performance |
| Timeline |
| Solid Power |
| Allison Transmission |
Solid Power and Allison Transmission Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solid Power and Allison Transmission
The main advantage of trading using opposite Solid Power and Allison Transmission positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solid Power position performs unexpectedly, Allison Transmission 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 Allison Transmission will offset losses from the drop in Allison Transmission's long position.The idea behind Solid Power and Allison Transmission Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Allison Transmission vs. Gentex | Allison Transmission vs. Adient PLC | Allison Transmission vs. Autoliv | Allison Transmission vs. Fox Factory Holding |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |