Correlation Between Service International and Smart Share
Can any of the company-specific risk be diversified away by investing in both Service International and Smart Share 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 Service International and Smart Share into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Service International and Smart Share Global, you can compare the effects of market volatilities on Service International and Smart Share 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 Service International with a short position of Smart Share. Check out your portfolio center. Please also check ongoing floating volatility patterns of Service International and Smart Share.
Diversification Opportunities for Service International and Smart Share
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Service and Smart is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Service International and Smart Share Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Share Global and Service International 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 Service International are associated (or correlated) with Smart Share. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Share Global has no effect on the direction of Service International i.e., Service International and Smart Share go up and down completely randomly.
Pair Corralation between Service International and Smart Share
Considering the 90-day investment horizon Service International is expected to generate 0.31 times more return on investment than Smart Share. However, Service International is 3.23 times less risky than Smart Share. It trades about 0.04 of its potential returns per unit of risk. Smart Share Global is currently generating about 0.0 per unit of risk. If you would invest 6,730 in Service International on August 27, 2024 and sell it today you would earn a total of 1,994 from holding Service International or generate 29.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Service International vs. Smart Share Global
Performance |
| Timeline |
| Service International |
| Smart Share Global |
Service International and Smart Share Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Service International and Smart Share
The main advantage of trading using opposite Service International and Smart Share positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Service International position performs unexpectedly, Smart Share 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 Smart Share will offset losses from the drop in Smart Share's long position.| Service International vs. Bright Horizons Family | Service International vs. Rollins | Service International vs. Smart Share Global | Service International vs. Carriage Services |
| Smart Share vs. Frontdoor | Smart Share vs. Bright Horizons Family | Smart Share vs. Mister Car Wash | Smart Share vs. Carriage Services |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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