Correlation Between 8x8 Common and SmartRent

Can any of the company-specific risk be diversified away by investing in both 8x8 Common and SmartRent 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 8x8 Common and SmartRent into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 8x8 Common Stock and SmartRent, you can compare the effects of market volatilities on 8x8 Common and SmartRent 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 8x8 Common with a short position of SmartRent. Check out your portfolio center. Please also check ongoing floating volatility patterns of 8x8 Common and SmartRent.

Diversification Opportunities for 8x8 Common and SmartRent

-0.37

Correlation Coefficient

8x8 Common  SmartRent

Very good diversification

The 3 months correlation between 8x8 and SmartRent is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding 8x8 Common Stock and SmartRent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartRent and 8x8 Common 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 8x8 Common Stock are associated (or correlated) with SmartRent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartRent has no effect on the direction of 8x8 Common i.e., 8x8 Common and SmartRent go up and down completely randomly.

Pair Corralation between 8x8 Common and SmartRent

Given the investment horizon of 90 days 8x8 Common Stock is expected to generate 1.08 times more return on investment than SmartRent. However, 8x8 Common is 1.08 times more volatile than SmartRent. It trades about 0.26 of its potential returns per unit of risk. SmartRent is currently generating about 0.04 per unit of risk. If you would invest  177.00  in 8x8 Common Stock on September 4, 2024 and sell it today you would earn a total of  142.00  from holding 8x8 Common Stock or generate 80.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

8x8 Common Stock  vs.  SmartRent

8x8 Common Stock

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 8x8 Common Stock are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical indicators, 8x8 Common unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 January 2025.

Pair Trading with 8x8 Common and SmartRent

The main advantage of trading using opposite 8x8 Common and SmartRent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 8x8 Common position performs unexpectedly, SmartRent 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 SmartRent will offset losses from the drop in SmartRent's long position.

The idea behind 8x8 Common Stock and SmartRent 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.