Correlation Between Spire Healthcare and Smithson Investment
Can any of the company-specific risk be diversified away by investing in both Spire Healthcare and Smithson Investment 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 Spire Healthcare and Smithson Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Healthcare Group and Smithson Investment Trust, you can compare the effects of market volatilities on Spire Healthcare and Smithson Investment 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 Spire Healthcare with a short position of Smithson Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Healthcare and Smithson Investment.
Diversification Opportunities for Spire Healthcare and Smithson Investment
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spire and Smithson is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Spire Healthcare Group and Smithson Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smithson Investment Trust and Spire Healthcare 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 Spire Healthcare Group are associated (or correlated) with Smithson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smithson Investment Trust has no effect on the direction of Spire Healthcare i.e., Spire Healthcare and Smithson Investment go up and down completely randomly.
Pair Corralation between Spire Healthcare and Smithson Investment
Assuming the 90 days trading horizon Spire Healthcare is expected to generate 3.02 times less return on investment than Smithson Investment. But when comparing it to its historical volatility, Spire Healthcare Group is 1.18 times less risky than Smithson Investment. It trades about 0.01 of its potential returns per unit of risk. Smithson Investment Trust is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 137,400 in Smithson Investment Trust on September 14, 2024 and sell it today you would earn a total of 14,600 from holding Smithson Investment Trust or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spire Healthcare Group vs. Smithson Investment Trust
Performance |
| Timeline |
| Spire Healthcare |
| Smithson Investment Trust |
Spire Healthcare and Smithson Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spire Healthcare and Smithson Investment
The main advantage of trading using opposite Spire Healthcare and Smithson Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Healthcare position performs unexpectedly, Smithson Investment 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 Smithson Investment will offset losses from the drop in Smithson Investment's long position.| Spire Healthcare vs. Universal Display Corp | Spire Healthcare vs. JD Sports Fashion | Spire Healthcare vs. Compal Electronics GDR | Spire Healthcare vs. Zinc Media Group |
| Smithson Investment vs. Cizzle Biotechnology Holdings | Smithson Investment vs. Beazer Homes USA | Smithson Investment vs. Ecofin Global Utilities | Smithson Investment vs. Ryanair Holdings plc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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