Correlation Between Smith Douglas and AMREP
Can any of the company-specific risk be diversified away by investing in both Smith Douglas and AMREP 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 Smith Douglas and AMREP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith Douglas Homes and AMREP, you can compare the effects of market volatilities on Smith Douglas and AMREP 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 Smith Douglas with a short position of AMREP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Douglas and AMREP.
Diversification Opportunities for Smith Douglas and AMREP
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smith and AMREP is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Smith Douglas Homes and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP and Smith Douglas 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 Smith Douglas Homes are associated (or correlated) with AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Smith Douglas i.e., Smith Douglas and AMREP go up and down completely randomly.
Pair Corralation between Smith Douglas and AMREP
Given the investment horizon of 90 days Smith Douglas Homes is expected to under-perform the AMREP. But the stock apears to be less risky and, when comparing its historical volatility, Smith Douglas Homes is 1.32 times less risky than AMREP. The stock trades about -0.02 of its potential returns per unit of risk. The AMREP is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,000 in AMREP on August 28, 2024 and sell it today you would earn a total of 541.00 from holding AMREP or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smith Douglas Homes vs. AMREP
Performance |
| Timeline |
| Smith Douglas Homes |
| AMREP |
Smith Douglas and AMREP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith Douglas and AMREP
The main advantage of trading using opposite Smith Douglas and AMREP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith Douglas position performs unexpectedly, AMREP 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 AMREP will offset losses from the drop in AMREP's long position.| Smith Douglas vs. TFI International | Smith Douglas vs. Hafnia Limited | Smith Douglas vs. LB Foster | Smith Douglas vs. Sun Country Airlines |
| AMREP vs. Park Electrochemical | AMREP vs. Innovative Solutions and | AMREP vs. Curtiss Wright | AMREP vs. National Presto Industries |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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