Correlation Between Smith AO and Chart Industries
Can any of the company-specific risk be diversified away by investing in both Smith AO and Chart Industries 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 Smith AO and Chart Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith AO and Chart Industries, you can compare the effects of market volatilities on Smith AO and Chart Industries 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 Smith AO with a short position of Chart Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith AO and Chart Industries.
Diversification Opportunities for Smith AO and Chart Industries
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Smith and Chart is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Smith AO and Chart Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chart Industries and Smith AO 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 Smith AO are associated (or correlated) with Chart Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chart Industries has no effect on the direction of Smith AO i.e., Smith AO and Chart Industries go up and down completely randomly.
Pair Corralation between Smith AO and Chart Industries
Considering the 90-day investment horizon Smith AO is expected to under-perform the Chart Industries. But the stock apears to be less risky and, when comparing its historical volatility, Smith AO is 2.78 times less risky than Chart Industries. The stock trades about -0.06 of its potential returns per unit of risk. The Chart Industries is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest 5,098 in Chart Industries on August 28, 2024 and sell it today you would earn a total of 2,093 from holding Chart Industries or generate 41.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smith AO vs. Chart Industries
Performance |
| Timeline |
| Smith AO |
| Chart Industries |
Smith AO and Chart Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith AO and Chart Industries
The main advantage of trading using opposite Smith AO and Chart Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith AO position performs unexpectedly, Chart Industries 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 Chart Industries will offset losses from the drop in Chart Industries' long position.| Smith AO vs. Dover | Smith AO vs. Illinois Tool Works | Smith AO vs. Xylem Inc | Smith AO vs. Franklin Electric Co |
| Chart Industries vs. Babcock Wilcox Enterprises | Chart Industries vs. Morgan Stanley | Chart Industries vs. National Storage Affiliates | Chart Industries vs. Aquagold International |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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