Correlation Between American International and Smart Share
Can any of the company-specific risk be diversified away by investing in both American International and Smart Share 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 International and Smart Share into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American International Holdings and Smart Share Global, you can compare the effects of market volatilities on American International and Smart Share 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 International with a short position of Smart Share. Check out your portfolio center. Please also check ongoing floating volatility patterns of American International and Smart Share.
Diversification Opportunities for American International and Smart Share
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Smart is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding American International Holding and Smart Share Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Share Global and American International 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 International Holdings are associated (or correlated) with Smart Share. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Share Global has no effect on the direction of American International i.e., American International and Smart Share go up and down completely randomly.
Pair Corralation between American International and Smart Share
Given the investment horizon of 90 days American International Holdings is expected to generate 86.85 times more return on investment than Smart Share. However, American International is 86.85 times more volatile than Smart Share Global. It trades about 0.19 of its potential returns per unit of risk. Smart Share Global is currently generating about -0.09 per unit of risk. If you would invest 0.01 in American International Holdings on August 25, 2024 and sell it today you would earn a total of 0.00 from holding American International Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American International Holding vs. Smart Share Global
Performance |
| Timeline |
| American International |
| Smart Share Global |
American International and Smart Share Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American International and Smart Share
The main advantage of trading using opposite American International and Smart Share positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American International position performs unexpectedly, Smart Share 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 Smart Share will offset losses from the drop in Smart Share's long position.| American International vs. Goodfood Market Corp | American International vs. GD Entertainment Technology | American International vs. Mister Car Wash | American International vs. Bright Horizons Family |
| Smart Share vs. Frontdoor | Smart Share vs. Bright Horizons Family | Smart Share vs. Mister Car Wash | Smart Share vs. Carriage Services |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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