Correlation Between SmartRent and Porch

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

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

Diversification Opportunities for SmartRent and Porch

-0.03

Correlation Coefficient

SmartRent  Porch

Good diversification

The 3 months correlation between SmartRent and Porch is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding SmartRent and Porch Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porch Group and SmartRent 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 SmartRent are associated (or correlated) with Porch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porch Group has no effect on the direction of SmartRent i.e., SmartRent and Porch go up and down completely randomly.

Pair Corralation between SmartRent and Porch

Given the investment horizon of 90 days SmartRent is expected to generate 0.57 times more return on investment than Porch. However, SmartRent is 1.74 times less risky than Porch. It trades about -0.05 of its potential returns per unit of risk. Porch Group is currently generating about -0.06 per unit of risk. If you would invest  291.00  in SmartRent on February 28, 2024 and sell it today you would lose (35.00) from holding SmartRent or give up 12.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SmartRent  vs.  Porch Group

SmartRent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SmartRent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Porch Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Porch Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with SmartRent and Porch

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

The idea behind SmartRent and Porch Group 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.