Correlation Between SolTech Energy and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both SolTech Energy and NYSE Composite 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 SolTech Energy and NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SolTech Energy Sweden and NYSE Composite, you can compare the effects of market volatilities on SolTech Energy and NYSE Composite 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 SolTech Energy with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolTech Energy and NYSE Composite.
Diversification Opportunities for SolTech Energy and NYSE Composite
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between SolTech and NYSE is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and SolTech Energy 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 SolTech Energy Sweden are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of SolTech Energy i.e., SolTech Energy and NYSE Composite go up and down completely randomly.
Pair Corralation between SolTech Energy and NYSE Composite
Assuming the 90 days trading horizon SolTech Energy Sweden is expected to generate 7.49 times more return on investment than NYSE Composite. However, SolTech Energy is 7.49 times more volatile than NYSE Composite. It trades about 0.02 of its potential returns per unit of risk. NYSE Composite is currently generating about 0.05 per unit of risk. If you would invest 464.00 in SolTech Energy Sweden on March 4, 2024 and sell it today you would lose (8.00) from holding SolTech Energy Sweden or give up 1.72% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 96.88% |
Values | Daily Returns |
SolTech Energy Sweden vs. NYSE Composite
Performance |
Timeline |
SolTech Energy and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
SolTech Energy Sweden
Pair trading matchups for SolTech Energy
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with SolTech Energy and NYSE Composite
The main advantage of trading using opposite SolTech Energy and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolTech Energy position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.SolTech Energy vs. Eolus Vind AB | SolTech Energy vs. Azelio AB | SolTech Energy vs. Sinch AB | SolTech Energy vs. Embracer Group AB |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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