Correlation Between SMX Public and KAR Auction
Can any of the company-specific risk be diversified away by investing in both SMX Public and KAR Auction 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 SMX Public and KAR Auction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMX Public Limited and KAR Auction Services, you can compare the effects of market volatilities on SMX Public and KAR Auction 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 SMX Public with a short position of KAR Auction. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMX Public and KAR Auction.
Diversification Opportunities for SMX Public and KAR Auction
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SMX and KAR is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and KAR Auction Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAR Auction Services and SMX Public 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 SMX Public Limited are associated (or correlated) with KAR Auction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAR Auction Services has no effect on the direction of SMX Public i.e., SMX Public and KAR Auction go up and down completely randomly.
Pair Corralation between SMX Public and KAR Auction
Considering the 90-day investment horizon SMX Public Limited is expected to under-perform the KAR Auction. In addition to that, SMX Public is 9.19 times more volatile than KAR Auction Services. It trades about -0.06 of its total potential returns per unit of risk. KAR Auction Services is currently generating about 0.05 per unit of volatility. If you would invest 1,550 in KAR Auction Services on September 12, 2024 and sell it today you would earn a total of 511.00 from holding KAR Auction Services or generate 32.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMX Public Limited vs. KAR Auction Services
Performance |
| Timeline |
| SMX Public Limited |
| KAR Auction Services |
SMX Public and KAR Auction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMX Public and KAR Auction
The main advantage of trading using opposite SMX Public and KAR Auction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMX Public position performs unexpectedly, KAR Auction 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 KAR Auction will offset losses from the drop in KAR Auction's long position.| SMX Public vs. Team Inc | SMX Public vs. Lichen China Limited | SMX Public vs. System1 | SMX Public vs. Eastman Kodak Co |
| KAR Auction vs. CarGurus | KAR Auction vs. Kingsway Financial Services | KAR Auction vs. Driven Brands Holdings | KAR Auction vs. Group 1 Automotive |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |