Correlation Between Workspace Group and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Workspace Group and SMA Solar 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 Workspace Group and SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workspace Group PLC and SMA Solar Technology, you can compare the effects of market volatilities on Workspace Group and SMA Solar 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 Workspace Group with a short position of SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workspace Group and SMA Solar.
Diversification Opportunities for Workspace Group and SMA Solar
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Workspace and SMA is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Workspace Group PLC and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology and Workspace Group 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 Workspace Group PLC are associated (or correlated) with SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Workspace Group i.e., Workspace Group and SMA Solar go up and down completely randomly.
Pair Corralation between Workspace Group and SMA Solar
Assuming the 90 days trading horizon Workspace Group PLC is expected to generate 0.3 times more return on investment than SMA Solar. However, Workspace Group PLC is 3.32 times less risky than SMA Solar. It trades about 0.03 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.14 per unit of risk. If you would invest 54,800 in Workspace Group PLC on September 4, 2024 and sell it today you would earn a total of 400.00 from holding Workspace Group PLC or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Workspace Group PLC vs. SMA Solar Technology
Performance |
| Timeline |
| Workspace Group PLC |
| SMA Solar Technology |
Workspace Group and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Workspace Group and SMA Solar
The main advantage of trading using opposite Workspace Group and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workspace Group position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Workspace Group vs. PPHE Hotel Group | Workspace Group vs. Naked Wines plc | Workspace Group vs. Bellevue Healthcare Trust | Workspace Group vs. Virgin Wines UK |
| SMA Solar vs. Samsung Electronics Co | SMA Solar vs. Samsung Electronics Co | SMA Solar vs. Hyundai Motor | SMA Solar vs. Toyota Motor Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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