Correlation Between SMG Industries and Worley Parsons
Can any of the company-specific risk be diversified away by investing in both SMG Industries and Worley Parsons 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 SMG Industries and Worley Parsons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMG Industries and Worley Parsons, you can compare the effects of market volatilities on SMG Industries and Worley Parsons 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 SMG Industries with a short position of Worley Parsons. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMG Industries and Worley Parsons.
Diversification Opportunities for SMG Industries and Worley Parsons
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SMG and Worley is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SMG Industries and Worley Parsons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worley Parsons and SMG Industries 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 SMG Industries are associated (or correlated) with Worley Parsons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worley Parsons has no effect on the direction of SMG Industries i.e., SMG Industries and Worley Parsons go up and down completely randomly.
Pair Corralation between SMG Industries and Worley Parsons
Given the investment horizon of 90 days SMG Industries is expected to generate 9.4 times more return on investment than Worley Parsons. However, SMG Industries is 9.4 times more volatile than Worley Parsons. It trades about 0.21 of its potential returns per unit of risk. Worley Parsons is currently generating about -0.1 per unit of risk. If you would invest 0.05 in SMG Industries on November 28, 2024 and sell it today you would earn a total of 0.06 from holding SMG Industries or generate 120.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
SMG Industries vs. Worley Parsons
Performance |
| Timeline |
| SMG Industries |
| Worley Parsons |
SMG Industries and Worley Parsons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMG Industries and Worley Parsons
The main advantage of trading using opposite SMG Industries and Worley Parsons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMG Industries position performs unexpectedly, Worley Parsons 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 Worley Parsons will offset losses from the drop in Worley Parsons' long position.| SMG Industries vs. Worley Parsons | SMG Industries vs. Petrofac Ltd ADR | SMG Industries vs. Saipem SpA | SMG Industries vs. Bri Chem Corp |
| Worley Parsons vs. Petrofac Ltd ADR | Worley Parsons vs. Saipem SpA | Worley Parsons vs. SMG Industries | Worley Parsons vs. Bri Chem Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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