Correlation Between SmartRent and Porch

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

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

Diversification Opportunities for SmartRent and Porch

0.19

Correlation Coefficient

SmartRent  Porch

Average diversification

The 3 months correlation between SmartRent and Porch is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding SmartRent and Porch Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porch Group and SmartRent 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 SmartRent are associated (or correlated) with Porch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porch Group has no effect on the direction of SmartRent i.e., SmartRent and Porch go up and down completely randomly.

Pair Corralation between SmartRent and Porch

Given the investment horizon of 90 days SmartRent is expected to under-perform the Porch. But the stock apears to be less risky and, when comparing its historical volatility, SmartRent is 2.12 times less risky than Porch. The stock trades about 0.0 of its potential returns per unit of risk. The Porch Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  250.00  in Porch Group on October 9, 2024 and sell it today you would earn a total of  274.00  from holding Porch Group or generate 109.6% return on investment over 90 days.

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

SmartRent  vs.  Porch Group

SmartRent

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SmartRent are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, SmartRent may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Porch Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Porch Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental indicators, Porch demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SmartRent and Porch

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

The idea behind SmartRent and Porch Group 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.