Correlation Between Smith AO and Xometry

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

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

Diversification Opportunities for Smith AO and Xometry

-0.81

Correlation Coefficient

Smith AO  Xometry

Pay attention - limited upside

The 3 months correlation between Smith and Xometry is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Smith AO and Xometry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xometry 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 Xometry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xometry has no effect on the direction of Smith AO i.e., Smith AO and Xometry go up and down completely randomly.

Pair Corralation between Smith AO and Xometry

Considering the 90-day investment horizon Smith AO is expected to generate 2.58 times less return on investment than Xometry. But when comparing it to its historical volatility, Smith AO is 3.26 times less risky than Xometry. It trades about 0.04 of its potential returns per unit of risk. Xometry is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,953  in Xometry on September 18, 2024 and sell it today you would earn a total of  523.00  from holding Xometry or generate 17.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Smith AO  vs.  Xometry

Smith AO

Risk-Adjusted Performance

0 of 100

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 abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Xometry

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xometry are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Xometry reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smith AO and Xometry

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

The idea behind Smith AO and Xometry 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.