Correlation Between Corporate Travel and SIMS METAL
Can any of the company-specific risk be diversified away by investing in both Corporate Travel and SIMS METAL 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 Corporate Travel and SIMS METAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Travel Management and SIMS METAL MGT, you can compare the effects of market volatilities on Corporate Travel and SIMS METAL 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 Corporate Travel with a short position of SIMS METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Travel and SIMS METAL.
Diversification Opportunities for Corporate Travel and SIMS METAL
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Corporate and SIMS is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and SIMS METAL MGT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS METAL MGT and Corporate Travel 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 Corporate Travel Management are associated (or correlated) with SIMS METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMS METAL MGT has no effect on the direction of Corporate Travel i.e., Corporate Travel and SIMS METAL go up and down completely randomly.
Pair Corralation between Corporate Travel and SIMS METAL
Assuming the 90 days trading horizon Corporate Travel Management is expected to generate 1.06 times more return on investment than SIMS METAL. However, Corporate Travel is 1.06 times more volatile than SIMS METAL MGT. It trades about 0.33 of its potential returns per unit of risk. SIMS METAL MGT is currently generating about 0.11 per unit of risk. If you would invest 695.00 in Corporate Travel Management on August 31, 2024 and sell it today you would earn a total of 155.00 from holding Corporate Travel Management or generate 22.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Travel Management vs. SIMS METAL MGT
Performance |
| Timeline |
| Corporate Travel Man |
| SIMS METAL MGT |
Corporate Travel and SIMS METAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Travel and SIMS METAL
The main advantage of trading using opposite Corporate Travel and SIMS METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Travel position performs unexpectedly, SIMS METAL 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 SIMS METAL will offset losses from the drop in SIMS METAL's long position.| Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc |
| SIMS METAL vs. SENECA FOODS A | SIMS METAL vs. Zijin Mining Group | SIMS METAL vs. LION ONE METALS | SIMS METAL vs. CAL MAINE FOODS |
Check out your portfolio center.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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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