Correlation Between Schmitt Industries and National Storm

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

By analyzing existing cross correlation between Schmitt Industries and National Storm Recovery, you can compare the effects of market volatilities on Schmitt Industries and National Storm 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 Schmitt Industries with a short position of National Storm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schmitt Industries and National Storm.

Diversification Opportunities for Schmitt Industries and National Storm

0.0

Correlation Coefficient

Schmitt Industries  National Storm

Pay attention - limited upside

The 3 months correlation between Schmitt and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Schmitt Industries and National Storm Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storm Recovery and Schmitt Industries 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 Schmitt Industries are associated (or correlated) with National Storm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storm Recovery has no effect on the direction of Schmitt Industries i.e., Schmitt Industries and National Storm go up and down completely randomly.

Pair Corralation between Schmitt Industries and National Storm

If you would invest  7.82  in National Storm Recovery on December 4, 2024 and sell it today you would lose (0.82) from holding National Storm Recovery or give up 10.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Schmitt Industries  vs.  National Storm Recovery

Schmitt Industries

Risk-Adjusted Performance

Very Weak

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

National Storm Recovery

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Storm Recovery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Schmitt Industries and National Storm

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

The idea behind Schmitt Industries and National Storm Recovery 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.