Correlation Between Smith AO and JBTMarel Corp

Can any of the company-specific risk be diversified away by investing in both Smith AO and JBTMarel Corp 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 Smith AO and JBTMarel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Smith AO and JBTMarel Corp, you can compare the effects of market volatilities on Smith AO and JBTMarel Corp 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 Smith AO with a short position of JBTMarel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith AO and JBTMarel Corp.

Diversification Opportunities for Smith AO and JBTMarel Corp

-0.09

Correlation Coefficient

Smith AO  JBTMarel Corp

Good diversification

The 3 months correlation between Smith and JBTMarel is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Smith AO and JBTMarel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBTMarel Corp and Smith AO 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 Smith AO are associated (or correlated) with JBTMarel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBTMarel Corp has no effect on the direction of Smith AO i.e., Smith AO and JBTMarel Corp go up and down completely randomly.

Pair Corralation between Smith AO and JBTMarel Corp

Considering the 90-day investment horizon Smith AO is expected to under-perform the JBTMarel Corp. But the stock apears to be less risky and, when comparing its historical volatility, Smith AO is 1.96 times less risky than JBTMarel Corp. The stock trades about 0.0 of its potential returns per unit of risk. The JBTMarel Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12,351  in JBTMarel Corp on December 19, 2024 and sell it today you would earn a total of  291.00  from holding JBTMarel Corp or generate 2.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Smith AO  vs.  JBTMarel Corp

Smith AO

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smith AO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Smith AO is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

JBTMarel Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JBTMarel Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, JBTMarel Corp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Smith AO and JBTMarel Corp

The main advantage of trading using opposite Smith AO and JBTMarel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith AO position performs unexpectedly, JBTMarel Corp 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 JBTMarel Corp will offset losses from the drop in JBTMarel Corp's long position.

The idea behind Smith AO and JBTMarel Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.