Correlation Between MTI WIRELESS and Smiths Group
Can any of the company-specific risk be diversified away by investing in both MTI WIRELESS and Smiths Group 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 MTI WIRELESS and Smiths Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTI WIRELESS EDGE and Smiths Group plc, you can compare the effects of market volatilities on MTI WIRELESS and Smiths Group 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 MTI WIRELESS with a short position of Smiths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI WIRELESS and Smiths Group.
Diversification Opportunities for MTI WIRELESS and Smiths Group
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MTI and Smiths is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding MTI WIRELESS EDGE and Smiths Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smiths Group plc and MTI WIRELESS 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 MTI WIRELESS EDGE are associated (or correlated) with Smiths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smiths Group plc has no effect on the direction of MTI WIRELESS i.e., MTI WIRELESS and Smiths Group go up and down completely randomly.
Pair Corralation between MTI WIRELESS and Smiths Group
Assuming the 90 days horizon MTI WIRELESS EDGE is expected to generate 2.32 times more return on investment than Smiths Group. However, MTI WIRELESS is 2.32 times more volatile than Smiths Group plc. It trades about 0.18 of its potential returns per unit of risk. Smiths Group plc is currently generating about -0.05 per unit of risk. If you would invest 47.00 in MTI WIRELESS EDGE on October 20, 2024 and sell it today you would earn a total of 9.00 from holding MTI WIRELESS EDGE or generate 19.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTI WIRELESS EDGE vs. Smiths Group plc
Performance |
| Timeline |
| MTI WIRELESS EDGE |
| Smiths Group plc |
MTI WIRELESS and Smiths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTI WIRELESS and Smiths Group
The main advantage of trading using opposite MTI WIRELESS and Smiths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI WIRELESS position performs unexpectedly, Smiths Group 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 Smiths Group will offset losses from the drop in Smiths Group's long position.| MTI WIRELESS vs. SOFI TECHNOLOGIES | MTI WIRELESS vs. INFORMATION SVC GRP | MTI WIRELESS vs. Addtech AB | MTI WIRELESS vs. Northern Data AG |
| Smiths Group vs. GigaMedia | Smiths Group vs. ATRESMEDIA | Smiths Group vs. PARKEN Sport Entertainment | Smiths Group vs. RCS MediaGroup SpA |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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