Correlation Between CIRCOR International and Smith AO
Can any of the company-specific risk be diversified away by investing in both CIRCOR International and Smith AO 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 CIRCOR International and Smith AO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIRCOR International and Smith AO, you can compare the effects of market volatilities on CIRCOR International and Smith AO 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 CIRCOR International with a short position of Smith AO. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIRCOR International and Smith AO.
Diversification Opportunities for CIRCOR International and Smith AO
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CIRCOR and Smith is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding CIRCOR International and Smith AO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith AO and CIRCOR International 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 CIRCOR International are associated (or correlated) with Smith AO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith AO has no effect on the direction of CIRCOR International i.e., CIRCOR International and Smith AO go up and down completely randomly.
Pair Corralation between CIRCOR International and Smith AO
Considering the 90-day investment horizon CIRCOR International is expected to generate 2.56 times more return on investment than Smith AO. However, CIRCOR International is 2.56 times more volatile than Smith AO. It trades about 0.12 of its potential returns per unit of risk. Smith AO is currently generating about 0.09 per unit of risk. If you would invest 2,018 in CIRCOR International on January 26, 2024 and sell it today you would earn a total of 3,582 from holding CIRCOR International or generate 177.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 65.14% |
Values | Daily Returns |
CIRCOR International vs. Smith AO
Performance |
Timeline |
CIRCOR International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Smith AO |
CIRCOR International and Smith AO Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CIRCOR International and Smith AO
The main advantage of trading using opposite CIRCOR International and Smith AO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIRCOR International position performs unexpectedly, Smith AO 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 Smith AO will offset losses from the drop in Smith AO's long position.CIRCOR International vs. Helios Technologies | CIRCOR International vs. Enpro Industries | CIRCOR International vs. Omega Flex | CIRCOR International vs. Luxfer Holdings PLC |
Smith AO vs. Dover | Smith AO vs. Illinois Tool Works | Smith AO vs. Xylem Inc | Smith AO vs. Franklin Electric Co |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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