Correlation Between BASE and Smith Micro
Can any of the company-specific risk be diversified away by investing in both BASE and Smith Micro 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 BASE and Smith Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BASE Inc and Smith Micro Software, you can compare the effects of market volatilities on BASE and Smith Micro 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 BASE with a short position of Smith Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASE and Smith Micro.
Diversification Opportunities for BASE and Smith Micro
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BASE and Smith is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and Smith Micro Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Micro Software and BASE 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 BASE Inc are associated (or correlated) with Smith Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Micro Software has no effect on the direction of BASE i.e., BASE and Smith Micro go up and down completely randomly.
Pair Corralation between BASE and Smith Micro
Assuming the 90 days horizon BASE is expected to generate 5.71 times less return on investment than Smith Micro. But when comparing it to its historical volatility, BASE Inc is 3.11 times less risky than Smith Micro. It trades about 0.05 of its potential returns per unit of risk. Smith Micro Software is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 62.00 in Smith Micro Software on November 2, 2024 and sell it today you would earn a total of 68.00 from holding Smith Micro Software or generate 109.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.04% |
| Values | Daily Returns |
BASE Inc vs. Smith Micro Software
Performance |
| Timeline |
| BASE Inc |
| Smith Micro Software |
BASE and Smith Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASE and Smith Micro
The main advantage of trading using opposite BASE and Smith Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASE position performs unexpectedly, Smith Micro 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 Micro will offset losses from the drop in Smith Micro's long position.| BASE vs. CurrentC Power | BASE vs. Agent Information Software | BASE vs. Auddia Inc | BASE vs. Maxwell Resource |
| Smith Micro vs. Dubber Limited | Smith Micro vs. Advanced Health Intelligence | Smith Micro vs. Danavation Technologies Corp | Smith Micro vs. BASE 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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