Correlation Between Mount Logan and SMC Entertainment

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

By analyzing existing cross correlation between Mount Logan Capital and SMC Entertainment, you can compare the effects of market volatilities on Mount Logan and SMC Entertainment 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 Mount Logan with a short position of SMC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mount Logan and SMC Entertainment.

Diversification Opportunities for Mount Logan and SMC Entertainment

0.76

Correlation Coefficient

Mount Logan  SMC Entertainment

Poor diversification

The 3 months correlation between Mount and SMC is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Mount Logan Capital and SMC Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Entertainment and Mount Logan 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 Mount Logan Capital are associated (or correlated) with SMC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Entertainment has no effect on the direction of Mount Logan i.e., Mount Logan and SMC Entertainment go up and down completely randomly.

Pair Corralation between Mount Logan and SMC Entertainment

Assuming the 90 days horizon Mount Logan Capital is expected to generate 0.08 times more return on investment than SMC Entertainment. However, Mount Logan Capital is 12.76 times less risky than SMC Entertainment. It trades about -0.14 of its potential returns per unit of risk. SMC Entertainment is currently generating about -0.03 per unit of risk. If you would invest  157.00  in Mount Logan Capital on September 16, 2024 and sell it today you would lose (8.00) from holding Mount Logan Capital or give up 5.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	75.38%
Values	Daily Returns

Mount Logan Capital  vs.  SMC Entertainment

Mount Logan Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mount Logan Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SMC Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMC Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Mount Logan and SMC Entertainment

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

The idea behind Mount Logan Capital and SMC Entertainment 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.