Correlation Between Atlas Copco and Smiths Group
Can any of the company-specific risk be diversified away by investing in both Atlas Copco 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 Atlas Copco and Smiths Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atlas Copco AB and Smiths Group Plc, you can compare the effects of market volatilities on Atlas Copco 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 Atlas Copco with a short position of Smiths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Smiths Group.
Diversification Opportunities for Atlas Copco and Smiths Group
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Atlas and Smiths is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB 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 Atlas Copco 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 Atlas Copco AB 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 Atlas Copco i.e., Atlas Copco and Smiths Group go up and down completely randomly.
Pair Corralation between Atlas Copco 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 | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Copco AB vs. Smiths Group Plc
Performance |
| Timeline |
| Atlas Copco AB |
| Smiths Group Plc |
Atlas Copco and Smiths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Smiths Group
The main advantage of trading using opposite Atlas Copco and Smiths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco 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.| Atlas Copco vs. Parker Hannifin | Atlas Copco vs. Eaton PLC | Atlas Copco vs. Dover | Atlas Copco vs. Illinois Tool Works |
| 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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