Correlation Between Schmitt Industries and Electro Sensors
Can any of the company-specific risk be diversified away by investing in both Schmitt Industries and Electro Sensors 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 Schmitt Industries and Electro Sensors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schmitt Industries and Electro Sensors, you can compare the effects of market volatilities on Schmitt Industries and Electro Sensors 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 Schmitt Industries with a short position of Electro Sensors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schmitt Industries and Electro Sensors.
Diversification Opportunities for Schmitt Industries and Electro Sensors
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Schmitt and Electro is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Schmitt Industries and Electro Sensors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electro Sensors and Schmitt 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 Schmitt Industries are associated (or correlated) with Electro Sensors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electro Sensors has no effect on the direction of Schmitt Industries i.e., Schmitt Industries and Electro Sensors go up and down completely randomly.
Pair Corralation between Schmitt Industries and Electro Sensors
Given the investment horizon of 90 days Schmitt Industries is expected to generate 42.17 times more return on investment than Electro Sensors. However, Schmitt Industries is 42.17 times more volatile than Electro Sensors. It trades about 0.17 of its potential returns per unit of risk. Electro Sensors is currently generating about -0.01 per unit of risk. If you would invest 91.00 in Schmitt Industries on August 24, 2024 and sell it today you would lose (72.00) from holding Schmitt Industries or give up 79.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 9.78% |
| Values | Daily Returns |
Schmitt Industries vs. Electro Sensors
Performance |
| Timeline |
| Schmitt Industries |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Electro Sensors |
Schmitt Industries and Electro Sensors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schmitt Industries and Electro Sensors
The main advantage of trading using opposite Schmitt Industries and Electro Sensors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schmitt Industries position performs unexpectedly, Electro Sensors 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 Electro Sensors will offset losses from the drop in Electro Sensors' long position.| Schmitt Industries vs. Nanalysis Scientific Corp | Schmitt Industries vs. Genasys | Schmitt Industries vs. Kraken Robotics | Schmitt Industries vs. Mesa Laboratories |
| Electro Sensors vs. Sono Tek Corp | Electro Sensors vs. Vishay Precision Group | Electro Sensors vs. Keyence | Electro Sensors vs. Luna Innovations Incorporated |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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