Correlation Between Smithfield Foods, and CarsalesCom

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

By analyzing existing cross correlation between Smithfield Foods, Common and CarsalesCom Ltd ADR, you can compare the effects of market volatilities on Smithfield Foods, and CarsalesCom 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 Smithfield Foods, with a short position of CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithfield Foods, and CarsalesCom.

Diversification Opportunities for Smithfield Foods, and CarsalesCom

0.68

Correlation Coefficient

Smithfield Foods,  CarsalesCom

Poor diversification

The 3 months correlation between Smithfield and CarsalesCom is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Smithfield Foods, Common and CarsalesCom Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom ADR and Smithfield Foods, 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 Smithfield Foods, Common are associated (or correlated) with CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom ADR has no effect on the direction of Smithfield Foods, i.e., Smithfield Foods, and CarsalesCom go up and down completely randomly.

Pair Corralation between Smithfield Foods, and CarsalesCom

Considering the 90-day investment horizon Smithfield Foods, is expected to generate 1.27 times less return on investment than CarsalesCom. But when comparing it to its historical volatility, Smithfield Foods, Common is 2.95 times less risky than CarsalesCom. It trades about 0.15 of its potential returns per unit of risk. CarsalesCom Ltd ADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,381  in CarsalesCom Ltd ADR on May 6, 2025 and sell it today you would earn a total of  447.00  from holding CarsalesCom Ltd ADR or generate 10.2% return on investment over 90 days.

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

Smithfield Foods, Common  vs.  CarsalesCom Ltd ADR

Smithfield Foods, Common

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Smithfield Foods, Common are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Smithfield Foods, may actually be approaching a critical reversion point that can send shares even higher in September 2025.

CarsalesCom ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CarsalesCom Ltd ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CarsalesCom showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smithfield Foods, and CarsalesCom

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

The idea behind Smithfield Foods, Common and CarsalesCom Ltd ADR 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 Commodity Directory module to find actively traded commodities issued by global exchanges.