Correlation Between Smithson Investment and Peach Property
Can any of the company-specific risk be diversified away by investing in both Smithson Investment and Peach Property 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 Smithson Investment and Peach Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smithson Investment Trust and Peach Property Group, you can compare the effects of market volatilities on Smithson Investment and Peach Property 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 Smithson Investment with a short position of Peach Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and Peach Property.
Diversification Opportunities for Smithson Investment and Peach Property
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Smithson and Peach is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust and Peach Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peach Property Group and Smithson Investment 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 Smithson Investment Trust are associated (or correlated) with Peach Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peach Property Group has no effect on the direction of Smithson Investment i.e., Smithson Investment and Peach Property go up and down completely randomly.
Pair Corralation between Smithson Investment and Peach Property
Assuming the 90 days trading horizon Smithson Investment is expected to generate 16.73 times less return on investment than Peach Property. But when comparing it to its historical volatility, Smithson Investment Trust is 20.75 times less risky than Peach Property. It trades about 0.21 of its potential returns per unit of risk. Peach Property Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 649.00 in Peach Property Group on September 13, 2024 and sell it today you would earn a total of 287.00 from holding Peach Property Group or generate 44.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Smithson Investment Trust vs. Peach Property Group
Performance |
| Timeline |
| Smithson Investment Trust |
| Peach Property Group |
Smithson Investment and Peach Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smithson Investment and Peach Property
The main advantage of trading using opposite Smithson Investment and Peach Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithson Investment position performs unexpectedly, Peach Property 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 Peach Property will offset losses from the drop in Peach Property's long position.| Smithson Investment vs. Ecclesiastical Insurance Office | Smithson Investment vs. Jacquet Metal Service | Smithson Investment vs. Dalata Hotel Group | Smithson Investment vs. Central Asia Metals |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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