Correlation Between Smith Douglas and Yoshitsu

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

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

Diversification Opportunities for Smith Douglas and Yoshitsu

0.62

Correlation Coefficient

Smith Douglas  Yoshitsu

Poor diversification

The 3 months correlation between Smith and Yoshitsu is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Smith Douglas Homes and Yoshitsu Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yoshitsu and Smith Douglas 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 Smith Douglas Homes are associated (or correlated) with Yoshitsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yoshitsu has no effect on the direction of Smith Douglas i.e., Smith Douglas and Yoshitsu go up and down completely randomly.

Pair Corralation between Smith Douglas and Yoshitsu

Given the investment horizon of 90 days Smith Douglas Homes is expected to under-perform the Yoshitsu. But the stock apears to be less risky and, when comparing its historical volatility, Smith Douglas Homes is 1.07 times less risky than Yoshitsu. The stock trades about -0.08 of its potential returns per unit of risk. The Yoshitsu Co Ltd is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  349.00  in Yoshitsu Co Ltd on January 13, 2025 and sell it today you would lose (42.00) from holding Yoshitsu Co Ltd or give up 12.03% of portfolio value over 90 days.

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

Smith Douglas Homes  vs.  Yoshitsu Co Ltd

Smith Douglas Homes

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Yoshitsu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yoshitsu Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Smith Douglas and Yoshitsu

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

The idea behind Smith Douglas Homes and Yoshitsu Co Ltd 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..