Correlation Between SMS Co, and Everus Construction

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

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

Diversification Opportunities for SMS Co, and Everus Construction

0.41

Correlation Coefficient

SMS Co,  Everus Construction

Very weak diversification

The 3 months correlation between SMS and Everus is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SMS Co, and Everus Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everus Construction and SMS Co, 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 SMS Co, are associated (or correlated) with Everus Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everus Construction has no effect on the direction of SMS Co, i.e., SMS Co, and Everus Construction go up and down completely randomly.

Pair Corralation between SMS Co, and Everus Construction

Assuming the 90 days horizon SMS Co, is expected to under-perform the Everus Construction. But the pink sheet apears to be less risky and, when comparing its historical volatility, SMS Co, is 1.13 times less risky than Everus Construction. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Everus Construction Group is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  4,900  in Everus Construction Group on September 26, 2024 and sell it today you would earn a total of  2,158  from holding Everus Construction Group or generate 44.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	10.05%
Values	Daily Returns

SMS Co,  vs.  Everus Construction Group

SMS Co,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMS Co, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Everus Construction

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly sluggish fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SMS Co, and Everus Construction

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

The idea behind SMS Co, and Everus Construction 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.