Correlation Between SWISS WATER and Sims Metal
Can any of the company-specific risk be diversified away by investing in both SWISS WATER 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 SWISS WATER and Sims Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SWISS WATER DECAFFCOFFEE and Sims Metal Management, you can compare the effects of market volatilities on SWISS WATER 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 SWISS WATER with a short position of Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and Sims Metal.
Diversification Opportunities for SWISS WATER and Sims Metal
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SWISS and Sims is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management and SWISS WATER 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 SWISS WATER DECAFFCOFFEE 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 Management has no effect on the direction of SWISS WATER i.e., SWISS WATER and Sims Metal go up and down completely randomly.
Pair Corralation between SWISS WATER and Sims Metal
Assuming the 90 days horizon SWISS WATER DECAFFCOFFEE is expected to under-perform the Sims Metal. In addition to that, SWISS WATER is 1.12 times more volatile than Sims Metal Management. It trades about -0.09 of its total potential returns per unit of risk. Sims Metal Management is currently generating about 0.17 per unit of volatility. If you would invest 740.00 in Sims Metal Management on October 19, 2024 and sell it today you would earn a total of 50.00 from holding Sims Metal Management or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SWISS WATER DECAFFCOFFEE vs. Sims Metal Management
Performance |
| Timeline |
| SWISS WATER DECAFFCOFFEE |
| Sims Metal Management |
SWISS WATER and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SWISS WATER and Sims Metal
The main advantage of trading using opposite SWISS WATER and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWISS WATER 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.| SWISS WATER vs. COSTCO WHOLESALE CDR | SWISS WATER vs. Apollo Investment Corp | SWISS WATER vs. HK Electric Investments | SWISS WATER vs. Caseys General Stores |
| Sims Metal vs. SWISS WATER DECAFFCOFFEE | Sims Metal vs. Methode Electronics | Sims Metal vs. Renesas Electronics | Sims Metal vs. Luckin Coffee |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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