Correlation Between Smithson Investment and Science In

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

By analyzing existing cross correlation between Smithson Investment Trust and Science in Sport, you can compare the effects of market volatilities on Smithson Investment and Science In 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 Smithson Investment with a short position of Science In. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and Science In.

Diversification Opportunities for Smithson Investment and Science In

0.54

Correlation Coefficient

Smithson Investment  Science In

Very weak diversification

The 3 months correlation between Smithson and Science is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust and Science in Sport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science in Sport and Smithson Investment 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 Smithson Investment Trust are associated (or correlated) with Science In. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science in Sport has no effect on the direction of Smithson Investment i.e., Smithson Investment and Science In go up and down completely randomly.

Pair Corralation between Smithson Investment and Science In

Assuming the 90 days trading horizon Smithson Investment Trust is expected to generate 1.92 times more return on investment than Science In. However, Smithson Investment is 1.92 times more volatile than Science in Sport. It trades about 0.25 of its potential returns per unit of risk. Science in Sport is currently generating about 0.17 per unit of risk. If you would invest  134,800  in Smithson Investment Trust on April 19, 2025 and sell it today you would earn a total of  19,400  from holding Smithson Investment Trust or generate 14.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	63.93%
Values	Daily Returns

Smithson Investment Trust  vs.  Science in Sport

Smithson Investment Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Smithson Investment Trust are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Smithson Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Science in Sport

Risk-Adjusted Performance

Good

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

Pair Trading with Smithson Investment and Science In

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

The idea behind Smithson Investment Trust and Science in Sport 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.