Correlation Between Aldel Financial and SM Investments
Can any of the company-specific risk be diversified away by investing in both Aldel Financial and SM Investments 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 Aldel Financial and SM Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aldel Financial II and SM Investments, you can compare the effects of market volatilities on Aldel Financial and SM Investments 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 Aldel Financial with a short position of SM Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and SM Investments.
Diversification Opportunities for Aldel Financial and SM Investments
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aldel and SVTMF is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and SM Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Investments and Aldel Financial 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 Aldel Financial II are associated (or correlated) with SM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Investments has no effect on the direction of Aldel Financial i.e., Aldel Financial and SM Investments go up and down completely randomly.
Pair Corralation between Aldel Financial and SM Investments
Given the investment horizon of 90 days Aldel Financial II is expected to generate 0.07 times more return on investment than SM Investments. However, Aldel Financial II is 14.98 times less risky than SM Investments. It trades about 0.24 of its potential returns per unit of risk. SM Investments is currently generating about -0.24 per unit of risk. If you would invest 993.00 in Aldel Financial II on October 25, 2024 and sell it today you would earn a total of 4.00 from holding Aldel Financial II or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aldel Financial II vs. SM Investments
Performance |
| Timeline |
| Aldel Financial II |
| SM Investments |
Aldel Financial and SM Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aldel Financial and SM Investments
The main advantage of trading using opposite Aldel Financial and SM Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial position performs unexpectedly, SM Investments 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 SM Investments will offset losses from the drop in SM Investments' long position.| Aldel Financial vs. Alvotech | Aldel Financial vs. Seadrill Limited | Aldel Financial vs. Inhibrx | Aldel Financial vs. Pembina Pipeline |
| SM Investments vs. Aldel Financial II | SM Investments vs. Artisan Partners Asset | SM Investments vs. Alaska Air Group | SM Investments vs. Inflection Point Acquisition |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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