Correlation Between GE Vernova and Smith Douglas
Can any of the company-specific risk be diversified away by investing in both GE Vernova and Smith Douglas 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 GE Vernova and Smith Douglas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Vernova LLC and Smith Douglas Homes, you can compare the effects of market volatilities on GE Vernova and Smith Douglas 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 GE Vernova with a short position of Smith Douglas. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Vernova and Smith Douglas.
Diversification Opportunities for GE Vernova and Smith Douglas
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GEV and Smith is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and Smith Douglas Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Douglas Homes and GE Vernova 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 GE Vernova LLC are associated (or correlated) with Smith Douglas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Douglas Homes has no effect on the direction of GE Vernova i.e., GE Vernova and Smith Douglas go up and down completely randomly.
Pair Corralation between GE Vernova and Smith Douglas
Considering the 90-day investment horizon GE Vernova LLC is expected to generate 1.0 times more return on investment than Smith Douglas. However, GE Vernova LLC is 1.0 times less risky than Smith Douglas. It trades about 0.18 of its potential returns per unit of risk. Smith Douglas Homes is currently generating about 0.04 per unit of risk. If you would invest 13,115 in GE Vernova LLC on September 23, 2024 and sell it today you would earn a total of 21,151 from holding GE Vernova LLC or generate 161.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 78.33% |
Values | Daily Returns |
GE Vernova LLC vs. Smith Douglas Homes
Performance |
Timeline |
GE Vernova LLC |
Smith Douglas Homes |
GE Vernova and Smith Douglas Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GE Vernova and Smith Douglas
The main advantage of trading using opposite GE Vernova and Smith Douglas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Vernova position performs unexpectedly, Smith Douglas 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 Smith Douglas will offset losses from the drop in Smith Douglas' long position.GE Vernova vs. Verde Clean Fuels | GE Vernova vs. ReNew Energy Global | GE Vernova vs. Ellomay Capital | GE Vernova vs. Eco Wave Power |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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