Correlation Between Smithson Investment and BE Semiconductor
Can any of the company-specific risk be diversified away by investing in both Smithson Investment and BE Semiconductor 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 BE Semiconductor 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 BE Semiconductor Industries, you can compare the effects of market volatilities on Smithson Investment and BE Semiconductor 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 BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and BE Semiconductor.
Diversification Opportunities for Smithson Investment and BE Semiconductor
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smithson and 0XVE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind 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 BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of Smithson Investment i.e., Smithson Investment and BE Semiconductor go up and down completely randomly.
Pair Corralation between Smithson Investment and BE Semiconductor
Assuming the 90 days trading horizon Smithson Investment is expected to generate 6.35 times less return on investment than BE Semiconductor. But when comparing it to its historical volatility, Smithson Investment Trust is 2.19 times less risky than BE Semiconductor. It trades about 0.03 of its potential returns per unit of risk. BE Semiconductor Industries is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,447 in BE Semiconductor Industries on September 20, 2024 and sell it today you would earn a total of 7,641 from holding BE Semiconductor Industries or generate 140.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Smithson Investment Trust vs. BE Semiconductor Industries
Performance |
| Timeline |
| Smithson Investment Trust |
| BE Semiconductor Ind |
Smithson Investment and BE Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smithson Investment and BE Semiconductor
The main advantage of trading using opposite Smithson Investment and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithson Investment position performs unexpectedly, BE Semiconductor 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 BE Semiconductor will offset losses from the drop in BE Semiconductor's long position.| Smithson Investment vs. Catalyst Media Group | Smithson Investment vs. CATLIN GROUP | Smithson Investment vs. Tamburi Investment Partners | Smithson Investment vs. Magnora ASA |
| BE Semiconductor vs. Diversified Energy | BE Semiconductor vs. Intuitive Investments Group | BE Semiconductor vs. Smithson Investment Trust | BE Semiconductor vs. Cincinnati Financial Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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