Correlation Between Smithson Investment and Impax Environmental
Can any of the company-specific risk be diversified away by investing in both Smithson Investment and Impax Environmental 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 Impax Environmental 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 Impax Environmental Markets, you can compare the effects of market volatilities on Smithson Investment and Impax Environmental 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 Impax Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and Impax Environmental.
Diversification Opportunities for Smithson Investment and Impax Environmental
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Smithson and Impax is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust and Impax Environmental Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impax Environmental 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 Impax Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impax Environmental has no effect on the direction of Smithson Investment i.e., Smithson Investment and Impax Environmental go up and down completely randomly.
Pair Corralation between Smithson Investment and Impax Environmental
Assuming the 90 days trading horizon Smithson Investment Trust is expected to generate 1.08 times more return on investment than Impax Environmental. However, Smithson Investment is 1.08 times more volatile than Impax Environmental Markets. It trades about 0.04 of its potential returns per unit of risk. Impax Environmental Markets is currently generating about -0.01 per unit of risk. If you would invest 137,400 in Smithson Investment Trust on October 13, 2024 and sell it today you would earn a total of 7,000 from holding Smithson Investment Trust or generate 5.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smithson Investment Trust vs. Impax Environmental Markets
Performance |
| Timeline |
| Smithson Investment Trust |
| Impax Environmental |
Smithson Investment and Impax Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smithson Investment and Impax Environmental
The main advantage of trading using opposite Smithson Investment and Impax Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithson Investment position performs unexpectedly, Impax Environmental 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 Impax Environmental will offset losses from the drop in Impax Environmental's long position.| Smithson Investment vs. Blackstone Loan Financing | Smithson Investment vs. First Class Metals | Smithson Investment vs. Empire Metals Limited | Smithson Investment vs. Ross Stores |
| Impax Environmental vs. Ryanair Holdings plc | Impax Environmental vs. Delta Air Lines | Impax Environmental vs. Advanced Medical Solutions | Impax Environmental vs. Creo Medical Group |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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