Correlation Between Smithson Investment and Gaztransport
Can any of the company-specific risk be diversified away by investing in both Smithson Investment and Gaztransport 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 Gaztransport 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 Gaztransport et Technigaz, you can compare the effects of market volatilities on Smithson Investment and Gaztransport 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 Gaztransport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and Gaztransport.
Diversification Opportunities for Smithson Investment and Gaztransport
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smithson and Gaztransport is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust and Gaztransport et Technigaz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport et Technigaz 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 Gaztransport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport et Technigaz has no effect on the direction of Smithson Investment i.e., Smithson Investment and Gaztransport go up and down completely randomly.
Pair Corralation between Smithson Investment and Gaztransport
Assuming the 90 days trading horizon Smithson Investment Trust is expected to generate 0.87 times more return on investment than Gaztransport. However, Smithson Investment Trust is 1.15 times less risky than Gaztransport. It trades about 0.29 of its potential returns per unit of risk. Gaztransport et Technigaz is currently generating about 0.14 per unit of risk. If you would invest 140,800 in Smithson Investment Trust on September 2, 2024 and sell it today you would earn a total of 8,800 from holding Smithson Investment Trust or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smithson Investment Trust vs. Gaztransport et Technigaz
Performance |
| Timeline |
| Smithson Investment Trust |
| Gaztransport et Technigaz |
Smithson Investment and Gaztransport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smithson Investment and Gaztransport
The main advantage of trading using opposite Smithson Investment and Gaztransport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithson Investment position performs unexpectedly, Gaztransport 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 Gaztransport will offset losses from the drop in Gaztransport's long position.| Smithson Investment vs. Toyota Motor Corp | Smithson Investment vs. SoftBank Group Corp | Smithson Investment vs. OTP Bank Nyrt | Smithson Investment vs. Las Vegas Sands |
| Gaztransport vs. Uniper SE | Gaztransport vs. Mulberry Group PLC | Gaztransport vs. London Security Plc | Gaztransport vs. Triad Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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