Correlation Between SP Plus and SMX Public

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

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

Diversification Opportunities for SP Plus and SMX Public

-0.14

Correlation Coefficient

SP Plus  SMX Public

Good diversification

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

Pair Corralation between SP Plus and SMX Public

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

SP Plus Corp  vs.  SMX Public Limited

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.

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.

Pair Trading with SP Plus and SMX Public

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

The idea behind SP Plus Corp and SMX Public Limited 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.