Correlation Between GT Capital and SM Investments
Can any of the company-specific risk be diversified away by investing in both GT Capital and SM Investments 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 GT Capital and SM Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GT Capital Holdings and SM Investments Corp, you can compare the effects of market volatilities on GT Capital and SM Investments 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 GT Capital with a short position of SM Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of GT Capital and SM Investments.
Diversification Opportunities for GT Capital and SM Investments
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GTCAP and SM Investments is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding GT Capital Holdings and SM Investments Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Investments Corp and GT Capital 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 GT Capital Holdings are associated (or correlated) with SM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Investments Corp has no effect on the direction of GT Capital i.e., GT Capital and SM Investments go up and down completely randomly.
Pair Corralation between GT Capital and SM Investments
Assuming the 90 days trading horizon GT Capital Holdings is expected to generate 1.3 times more return on investment than SM Investments. However, GT Capital is 1.3 times more volatile than SM Investments Corp. It trades about 0.06 of its potential returns per unit of risk. SM Investments Corp is currently generating about 0.0 per unit of risk. If you would invest 42,452 in GT Capital Holdings on September 2, 2024 and sell it today you would earn a total of 23,048 from holding GT Capital Holdings or generate 54.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GT Capital Holdings vs. SM Investments Corp
Performance |
| Timeline |
| GT Capital Holdings |
| SM Investments Corp |
GT Capital and SM Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GT Capital and SM Investments
The main advantage of trading using opposite GT Capital and SM Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GT Capital position performs unexpectedly, SM Investments 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 SM Investments will offset losses from the drop in SM Investments' long position.| GT Capital vs. Philex Mining Corp | GT Capital vs. Metropolitan Bank Trust | GT Capital vs. Apex Mining Co | GT Capital vs. STI Education Systems |
| SM Investments vs. Crown Asia Chemicals | SM Investments vs. Concepcion Industrial Corp | SM Investments vs. Union Bank of | SM Investments vs. Manulife Financial Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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