Correlation Between Dover and Smith AO
Can any of the company-specific risk be diversified away by investing in both Dover and Smith AO 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 Dover and Smith AO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dover and Smith AO, you can compare the effects of market volatilities on Dover and Smith AO 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 Dover with a short position of Smith AO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dover and Smith AO.
Diversification Opportunities for Dover and Smith AO
Very good diversification
The 3 months correlation between Dover and Smith is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dover and Smith AO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith AO and Dover 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 Dover are associated (or correlated) with Smith AO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith AO has no effect on the direction of Dover i.e., Dover and Smith AO go up and down completely randomly.
Pair Corralation between Dover and Smith AO
Considering the 90-day investment horizon Dover is expected to generate 0.86 times more return on investment than Smith AO. However, Dover is 1.16 times less risky than Smith AO. It trades about 0.06 of its potential returns per unit of risk. Smith AO is currently generating about -0.04 per unit of risk. If you would invest 18,244 in Dover on August 24, 2024 and sell it today you would earn a total of 2,005 from holding Dover or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dover vs. Smith AO
Performance |
| Timeline |
| Dover |
| Smith AO |
Dover and Smith AO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dover and Smith AO
The main advantage of trading using opposite Dover and Smith AO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dover position performs unexpectedly, Smith AO 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 AO will offset losses from the drop in Smith AO's long position.| Dover vs. Small Cap Core | Dover vs. Freedom Holding Corp | Dover vs. Gfl Environmental Holdings | Dover vs. Growth Fund Of |
| Smith AO vs. Dover | Smith AO vs. Illinois Tool Works | Smith AO vs. Xylem Inc | Smith AO vs. Franklin Electric Co |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |