Correlation Between Young Cos and Smithson Investment
Can any of the company-specific risk be diversified away by investing in both Young Cos and Smithson 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 Young Cos and Smithson Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Young Cos Brewery and Smithson Investment Trust, you can compare the effects of market volatilities on Young Cos and Smithson 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 Young Cos with a short position of Smithson Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Young Cos and Smithson Investment.
Diversification Opportunities for Young Cos and Smithson Investment
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Young and Smithson is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Young Cos Brewery and Smithson Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smithson Investment Trust and Young Cos 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 Young Cos Brewery are associated (or correlated) with Smithson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smithson Investment Trust has no effect on the direction of Young Cos i.e., Young Cos and Smithson Investment go up and down completely randomly.
Pair Corralation between Young Cos and Smithson Investment
Assuming the 90 days trading horizon Young Cos Brewery is expected to under-perform the Smithson Investment. In addition to that, Young Cos is 1.58 times more volatile than Smithson Investment Trust. It trades about 0.0 of its total potential returns per unit of risk. Smithson Investment Trust is currently generating about 0.01 per unit of volatility. If you would invest 137,600 in Smithson Investment Trust on October 16, 2024 and sell it today you would earn a total of 6,600 from holding Smithson Investment Trust or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.58% |
| Values | Daily Returns |
Young Cos Brewery vs. Smithson Investment Trust
Performance |
| Timeline |
| Young Cos Brewery |
| Smithson Investment Trust |
Young Cos and Smithson Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Young Cos and Smithson Investment
The main advantage of trading using opposite Young Cos and Smithson Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Young Cos position performs unexpectedly, Smithson 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 Smithson Investment will offset losses from the drop in Smithson Investment's long position.| Young Cos vs. Bell Food Group | Young Cos vs. Odfjell Drilling | Young Cos vs. First Class Metals | Young Cos vs. Dairy Farm International |
| Smithson Investment vs. MTI Wireless Edge | Smithson Investment vs. Young Cos Brewery | Smithson Investment vs. Symphony Environmental Technologies | Smithson Investment vs. Molson Coors Beverage |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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