Correlation Between SM Investments and SLR Investment
Can any of the company-specific risk be diversified away by investing in both SM Investments and SLR 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 SM Investments and SLR Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Investments and SLR Investment Corp, you can compare the effects of market volatilities on SM Investments and SLR 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 SM Investments with a short position of SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and SLR Investment.
Diversification Opportunities for SM Investments and SLR Investment
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SVTMF and SLR is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp and SM Investments 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 SM Investments are associated (or correlated) with SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of SM Investments i.e., SM Investments and SLR Investment go up and down completely randomly.
Pair Corralation between SM Investments and SLR Investment
Assuming the 90 days horizon SM Investments is expected to generate 1.38 times less return on investment than SLR Investment. In addition to that, SM Investments is 2.31 times more volatile than SLR Investment Corp. It trades about 0.06 of its total potential returns per unit of risk. SLR Investment Corp is currently generating about 0.2 per unit of volatility. If you would invest 1,464 in SLR Investment Corp on November 1, 2024 and sell it today you would earn a total of 202.00 from holding SLR Investment Corp or generate 13.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Investments vs. SLR Investment Corp
Performance |
| Timeline |
| SM Investments |
| SLR Investment Corp |
SM Investments and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Investments and SLR Investment
The main advantage of trading using opposite SM Investments and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Investments position performs unexpectedly, SLR 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 SLR Investment will offset losses from the drop in SLR Investment's long position.| SM Investments vs. Air Products and | SM Investments vs. Gladstone Investment | SM Investments vs. Chemours Co | SM Investments vs. Shenzhen Investment Holdings |
| SLR Investment vs. Horizon Technology Finance | SLR Investment vs. WhiteHorse Finance | SLR Investment vs. Gladstone Capital | SLR Investment vs. PennantPark Floating Rate |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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