Correlation Between American Commerce and Smiths Group
Can any of the company-specific risk be diversified away by investing in both American Commerce and Smiths Group 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 American Commerce and Smiths Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Commerce Solutions and Smiths Group Plc, you can compare the effects of market volatilities on American Commerce and Smiths Group 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 American Commerce with a short position of Smiths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Commerce and Smiths Group.
Diversification Opportunities for American Commerce and Smiths Group
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Smiths is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Commerce Solutions and Smiths Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smiths Group Plc and American Commerce 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 American Commerce Solutions are associated (or correlated) with Smiths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smiths Group Plc has no effect on the direction of American Commerce i.e., American Commerce and Smiths Group go up and down completely randomly.
Pair Corralation between American Commerce and Smiths Group
If you would invest 2,081 in Smiths Group Plc on August 30, 2024 and sell it today you would earn a total of 197.00 from holding Smiths Group Plc or generate 9.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Commerce Solutions vs. Smiths Group Plc
Performance |
| Timeline |
| American Commerce |
| Smiths Group Plc |
American Commerce and Smiths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Commerce and Smiths Group
The main advantage of trading using opposite American Commerce and Smiths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Commerce position performs unexpectedly, Smiths Group 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 Smiths Group will offset losses from the drop in Smiths Group's long position.| American Commerce vs. Deere Company | American Commerce vs. Columbus McKinnon | American Commerce vs. Hyster Yale Materials Handling | American Commerce vs. Manitowoc |
| Smiths Group vs. Vestas Wind Systems | Smiths Group vs. Nuscale Power Corp | Smiths Group vs. Ballard Power Systems | Smiths Group vs. Rockwell Automation |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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