Correlation Between Valmont Industries and Solid Power
Can any of the company-specific risk be diversified away by investing in both Valmont Industries and Solid Power 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 Valmont Industries and Solid Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valmont Industries and Solid Power, you can compare the effects of market volatilities on Valmont Industries and Solid Power 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 Valmont Industries with a short position of Solid Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valmont Industries and Solid Power.
Diversification Opportunities for Valmont Industries and Solid Power
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Valmont and Solid is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Valmont Industries and Solid Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Power and Valmont Industries 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 Valmont Industries are associated (or correlated) with Solid Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Power has no effect on the direction of Valmont Industries i.e., Valmont Industries and Solid Power go up and down completely randomly.
Pair Corralation between Valmont Industries and Solid Power
Considering the 90-day investment horizon Valmont Industries is expected to generate 2.24 times less return on investment than Solid Power. But when comparing it to its historical volatility, Valmont Industries is 5.77 times less risky than Solid Power. It trades about 0.1 of its potential returns per unit of risk. Solid Power is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Solid Power on August 24, 2024 and sell it today you would lose (0.49) from holding Solid Power or give up 4.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valmont Industries vs. Solid Power
Performance |
| Timeline |
| Valmont Industries |
| Solid Power |
Valmont Industries and Solid Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valmont Industries and Solid Power
The main advantage of trading using opposite Valmont Industries and Solid Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valmont Industries position performs unexpectedly, Solid Power 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 Solid Power will offset losses from the drop in Solid Power's long position.| Valmont Industries vs. Matthews International | Valmont Industries vs. Griffon | Valmont Industries vs. Brookfield Business Partners | Valmont Industries vs. MDU Resources Group |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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