Correlation Between Integral and SM Investments
Can any of the company-specific risk be diversified away by investing in both Integral 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 Integral and SM Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Integral Ad Science and SM Investments, you can compare the effects of market volatilities on Integral 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 Integral with a short position of SM Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integral and SM Investments.
Diversification Opportunities for Integral and SM Investments
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Integral and SVTMF is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Integral Ad Science and SM Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Investments and Integral 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 Integral Ad Science 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 has no effect on the direction of Integral i.e., Integral and SM Investments go up and down completely randomly.
Pair Corralation between Integral and SM Investments
Considering the 90-day investment horizon Integral Ad Science is expected to generate 1.36 times more return on investment than SM Investments. However, Integral is 1.36 times more volatile than SM Investments. It trades about -0.07 of its potential returns per unit of risk. SM Investments is currently generating about -0.18 per unit of risk. If you would invest 1,044 in Integral Ad Science on October 17, 2024 and sell it today you would lose (64.00) from holding Integral Ad Science or give up 6.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Integral Ad Science vs. SM Investments
Performance |
| Timeline |
| Integral Ad Science |
| SM Investments |
Integral and SM Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Integral and SM Investments
The main advantage of trading using opposite Integral and SM Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integral 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.The idea behind Integral Ad Science and SM Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SM Investments vs. Eldorado Gold Corp | SM Investments vs. Townsquare Media | SM Investments vs. Integral Ad Science | SM Investments vs. Yuexiu Transport Infrastructure |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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