Correlation Between Solar Alliance and Big Rock
Can any of the company-specific risk be diversified away by investing in both Solar Alliance and Big Rock 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 Alliance and Big Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solar Alliance Energy and Big Rock Brewery, you can compare the effects of market volatilities on Solar Alliance and Big Rock 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 Alliance with a short position of Big Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Alliance and Big Rock.
Diversification Opportunities for Solar Alliance and Big Rock
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Solar and Big is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Solar Alliance Energy and Big Rock Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Rock Brewery and Solar Alliance 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 Alliance Energy are associated (or correlated) with Big Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Rock Brewery has no effect on the direction of Solar Alliance i.e., Solar Alliance and Big Rock go up and down completely randomly.
Pair Corralation between Solar Alliance and Big Rock
Assuming the 90 days trading horizon Solar Alliance is expected to generate 5.2 times less return on investment than Big Rock. But when comparing it to its historical volatility, Solar Alliance Energy is 1.11 times less risky than Big Rock. It trades about 0.02 of its potential returns per unit of risk. Big Rock Brewery is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Big Rock Brewery on September 12, 2024 and sell it today you would earn a total of 96.00 from holding Big Rock Brewery or generate 505.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solar Alliance Energy vs. Big Rock Brewery
Performance |
| Timeline |
| Solar Alliance Energy |
| Big Rock Brewery |
Solar Alliance and Big Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solar Alliance and Big Rock
The main advantage of trading using opposite Solar Alliance and Big Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar Alliance position performs unexpectedly, Big Rock 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 Big Rock will offset losses from the drop in Big Rock's long position.| Solar Alliance vs. Braille Energy Systems | Solar Alliance vs. Therma Bright | Solar Alliance vs. CryptoStar Corp | Solar Alliance vs. Manganese X Energy |
| Big Rock vs. iShares Canadian HYBrid | Big Rock vs. Solar Alliance Energy | Big Rock vs. PHN Multi Style All Cap | Big Rock vs. EcoSynthetix |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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