Correlation Between SMX Public and SP Plus

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

By analyzing existing cross correlation between SMX Public Limited and SP Plus Corp, you can compare the effects of market volatilities on SMX Public and SP Plus 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 SMX Public with a short position of SP Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMX Public and SP Plus.

Diversification Opportunities for SMX Public and SP Plus

-0.14

Correlation Coefficient

SMX Public  SP Plus

Good diversification

The 3 months correlation between SMX and SP Plus is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and SP Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Plus Corp and SMX Public 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 SMX Public Limited are associated (or correlated) with SP Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Plus Corp has no effect on the direction of SMX Public i.e., SMX Public and SP Plus go up and down completely randomly.

Pair Corralation between SMX Public and SP Plus

If you would invest  1.00  in SMX Public Limited on September 5, 2024 and sell it today you would lose (0.02) from holding SMX Public Limited or give up 2.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.03%
Values	Daily Returns

SMX Public Limited  vs.  SP Plus Corp

SMX Public Limited

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SMX Public Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SMX Public showed solid returns over the last few months and may actually be approaching a breakup point.

SP Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SP Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SP Plus is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SMX Public and SP Plus

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

The idea behind SMX Public Limited and SP Plus Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.