Correlation Between Mediag3 and Smith Douglas

Can any of the company-specific risk be diversified away by investing in both Mediag3 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 Mediag3 and Smith Douglas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mediag3 and Smith Douglas Homes, you can compare the effects of market volatilities on Mediag3 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 Mediag3 with a short position of Smith Douglas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mediag3 and Smith Douglas.

Diversification Opportunities for Mediag3 and Smith Douglas

0.0

Correlation Coefficient

Mediag3  Smith Douglas

Pay attention - limited upside

The 3 months correlation between Mediag3 and Smith is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mediag3 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 Mediag3 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 Mediag3 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 Mediag3 i.e., Mediag3 and Smith Douglas go up and down completely randomly.

Pair Corralation between Mediag3 and Smith Douglas

If you would invest  2,400  in Smith Douglas Homes on September 26, 2024 and sell it today you would earn a total of  309.00  from holding Smith Douglas Homes or generate 12.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	48.59%
Values	Daily Returns

Mediag3  vs.  Smith Douglas Homes

Mediag3

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mediag3 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mediag3 is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Smith Douglas Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smith Douglas Homes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Mediag3 and Smith Douglas

The main advantage of trading using opposite Mediag3 and Smith Douglas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mediag3 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.

The idea behind Mediag3 and Smith Douglas Homes 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.