Correlation Between Smith Midland and American Aires
Can any of the company-specific risk be diversified away by investing in both Smith Midland and American Aires 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 Midland and American Aires into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith Midland Corp and American Aires, you can compare the effects of market volatilities on Smith Midland and American Aires 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 Midland with a short position of American Aires. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Midland and American Aires.
Diversification Opportunities for Smith Midland and American Aires
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Smith and American is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Smith Midland Corp and American Aires in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Aires and Smith Midland 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 Midland Corp are associated (or correlated) with American Aires. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Aires has no effect on the direction of Smith Midland i.e., Smith Midland and American Aires go up and down completely randomly.
Pair Corralation between Smith Midland and American Aires
Given the investment horizon of 90 days Smith Midland Corp is expected to under-perform the American Aires. But the stock apears to be less risky and, when comparing its historical volatility, Smith Midland Corp is 3.12 times less risky than American Aires. The stock trades about -0.07 of its potential returns per unit of risk. The American Aires is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 14.00 in American Aires on November 5, 2024 and sell it today you would earn a total of 0.00 from holding American Aires or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Smith Midland Corp vs. American Aires
Performance |
| Timeline |
| Smith Midland Corp |
| American Aires |
Smith Midland and American Aires Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith Midland and American Aires
The main advantage of trading using opposite Smith Midland and American Aires positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith Midland position performs unexpectedly, American Aires 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 American Aires will offset losses from the drop in American Aires' long position.| Smith Midland vs. United States Lime | Smith Midland vs. Holcim | Smith Midland vs. Lafargeholcim Ltd ADR | Smith Midland vs. Cementos Pacasmayo SAA |
| American Aires vs. alpha En | American Aires vs. Alps Electric Co | American Aires vs. Bitmine Immersion Technologies | American Aires vs. AT S Austria |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |