Correlation Between Owens Corning and Smith Midland
Can any of the company-specific risk be diversified away by investing in both Owens Corning 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 Owens Corning and Smith Midland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Owens Corning and Smith Midland Corp, you can compare the effects of market volatilities on Owens Corning 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 Owens Corning with a short position of Smith Midland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Owens Corning and Smith Midland.
Diversification Opportunities for Owens Corning and Smith Midland
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Owens and Smith is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Owens Corning 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 Owens Corning 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 Owens Corning 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 Owens Corning i.e., Owens Corning and Smith Midland go up and down completely randomly.
Pair Corralation between Owens Corning and Smith Midland
Allowing for the 90-day total investment horizon Owens Corning is expected to generate 3.11 times less return on investment than Smith Midland. But when comparing it to its historical volatility, Owens Corning is 3.15 times less risky than Smith Midland. It trades about 0.35 of its potential returns per unit of risk. Smith Midland Corp is currently generating about 0.34 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Owens Corning vs. Smith Midland Corp
Performance |
| Timeline |
| Owens Corning |
| Smith Midland Corp |
Owens Corning and Smith Midland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Owens Corning and Smith Midland
The main advantage of trading using opposite Owens Corning and Smith Midland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Owens Corning 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.| Owens Corning vs. Trane Technologies plc | Owens Corning vs. Masco | Owens Corning vs. Quanex Building Products | Owens Corning vs. Jeld Wen Holding |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |