Correlation Between Celanese and Smith Midland
Can any of the company-specific risk be diversified away by investing in both Celanese and Smith Midland 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 Celanese and Smith Midland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celanese and Smith Midland Corp, you can compare the effects of market volatilities on Celanese and Smith Midland 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 Celanese with a short position of Smith Midland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celanese and Smith Midland.
Diversification Opportunities for Celanese and Smith Midland
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Celanese and Smith is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Celanese and Smith Midland Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Midland Corp and Celanese 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 Celanese are associated (or correlated) with Smith Midland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Midland Corp has no effect on the direction of Celanese i.e., Celanese and Smith Midland go up and down completely randomly.
Pair Corralation between Celanese and Smith Midland
Allowing for the 90-day total investment horizon Celanese is expected to under-perform the Smith Midland. In addition to that, Celanese is 1.15 times more volatile than Smith Midland Corp. It trades about -0.39 of its total potential returns per unit of risk. Smith Midland Corp is currently generating about 0.34 per unit of volatility. If you would invest 3,379 in Smith Midland Corp on August 31, 2024 and sell it today you would earn a total of 1,461 from holding Smith Midland Corp or generate 43.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Celanese vs. Smith Midland Corp
Performance |
| Timeline |
| Celanese |
| Smith Midland Corp |
Celanese and Smith Midland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Celanese and Smith Midland
The main advantage of trading using opposite Celanese and Smith Midland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celanese position performs unexpectedly, Smith Midland 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 Midland will offset losses from the drop in Smith Midland's long position.| Celanese vs. Tronox Holdings PLC | Celanese vs. Green Plains Renewable | Celanese vs. Lsb Industries | Celanese vs. Valhi Inc |
| Smith Midland vs. United States Lime | Smith Midland vs. Holcim | Smith Midland vs. Lafargeholcim Ltd ADR | Smith Midland vs. Cementos Pacasmayo SAA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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