Correlation Between SMA Solar and Marks
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Marks 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 SMA Solar and Marks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Marks and Spencer, you can compare the effects of market volatilities on SMA Solar and Marks 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 SMA Solar with a short position of Marks. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Marks.
Diversification Opportunities for SMA Solar and Marks
Good diversification
The 3 months correlation between SMA and Marks is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer and SMA Solar 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 SMA Solar Technology are associated (or correlated) with Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of SMA Solar i.e., SMA Solar and Marks go up and down completely randomly.
Pair Corralation between SMA Solar and Marks
Assuming the 90 days trading horizon SMA Solar Technology is expected to under-perform the Marks. In addition to that, SMA Solar is 2.38 times more volatile than Marks and Spencer. It trades about -0.13 of its total potential returns per unit of risk. Marks and Spencer is currently generating about 0.09 per unit of volatility. If you would invest 27,346 in Marks and Spencer on September 25, 2024 and sell it today you would earn a total of 10,524 from holding Marks and Spencer or generate 38.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
SMA Solar Technology vs. Marks and Spencer
Performance |
Timeline |
SMA Solar Technology |
Marks and Spencer |
SMA Solar and Marks Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SMA Solar and Marks
The main advantage of trading using opposite SMA Solar and Marks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Marks 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 Marks will offset losses from the drop in Marks' long position.SMA Solar vs. Uniper SE | SMA Solar vs. Mulberry Group PLC | SMA Solar vs. London Security Plc | SMA Solar vs. Triad Group PLC |
Marks vs. Cognizant Technology Solutions | Marks vs. SMA Solar Technology | Marks vs. Auction Technology Group | Marks vs. Oxford Technology 2 |
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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