Correlation Between Api Group and Smith Douglas
Can any of the company-specific risk be diversified away by investing in both Api Group and Smith Douglas 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 Api Group and Smith Douglas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Api Group Corp and Smith Douglas Homes, you can compare the effects of market volatilities on Api Group and Smith Douglas 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 Api Group with a short position of Smith Douglas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Api Group and Smith Douglas.
Diversification Opportunities for Api Group and Smith Douglas
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Api and Smith is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Api Group Corp and Smith Douglas Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Douglas Homes and Api Group 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 Api Group Corp are associated (or correlated) with Smith Douglas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Douglas Homes has no effect on the direction of Api Group i.e., Api Group and Smith Douglas go up and down completely randomly.
Pair Corralation between Api Group and Smith Douglas
Considering the 90-day investment horizon Api Group is expected to generate 11.17 times less return on investment than Smith Douglas. But when comparing it to its historical volatility, Api Group Corp is 1.67 times less risky than Smith Douglas. It trades about 0.01 of its potential returns per unit of risk. Smith Douglas Homes is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,549 in Smith Douglas Homes on September 5, 2024 and sell it today you would earn a total of 846.00 from holding Smith Douglas Homes or generate 33.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Api Group Corp vs. Smith Douglas Homes
Performance |
| Timeline |
| Api Group Corp |
| Smith Douglas Homes |
Api Group and Smith Douglas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Api Group and Smith Douglas
The main advantage of trading using opposite Api Group and Smith Douglas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Api Group position performs unexpectedly, Smith Douglas 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 Smith Douglas will offset losses from the drop in Smith Douglas' long position.| Api Group vs. Topbuild Corp | Api Group vs. MYR Group | Api Group vs. Comfort Systems USA | Api Group vs. Construction Partners |
| Smith Douglas vs. Api Group Corp | Smith Douglas vs. MYR Group | Smith Douglas vs. Comfort Systems USA | Smith Douglas vs. Arcosa Inc |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |