Correlation Between Science Applications and Imperial Metals
Can any of the company-specific risk be diversified away by investing in both Science Applications and Imperial Metals 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 Science Applications and Imperial Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and Imperial Metals, you can compare the effects of market volatilities on Science Applications and Imperial Metals 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 Science Applications with a short position of Imperial Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and Imperial Metals.
Diversification Opportunities for Science Applications and Imperial Metals
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Science and Imperial is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and Imperial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Metals and Science Applications 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 Science Applications International are associated (or correlated) with Imperial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Metals has no effect on the direction of Science Applications i.e., Science Applications and Imperial Metals go up and down completely randomly.
Pair Corralation between Science Applications and Imperial Metals
Assuming the 90 days trading horizon Science Applications International is expected to under-perform the Imperial Metals. In addition to that, Science Applications is 1.78 times more volatile than Imperial Metals. It trades about -0.31 of its total potential returns per unit of risk. Imperial Metals is currently generating about -0.07 per unit of volatility. If you would invest 128.00 in Imperial Metals on September 13, 2024 and sell it today you would lose (5.00) from holding Imperial Metals or give up 3.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Applications Internati vs. Imperial Metals
Performance |
| Timeline |
| Science Applications |
| Imperial Metals |
Science Applications and Imperial Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and Imperial Metals
The main advantage of trading using opposite Science Applications and Imperial Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications position performs unexpectedly, Imperial Metals 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 Imperial Metals will offset losses from the drop in Imperial Metals' long position.| Science Applications vs. PSI Software AG | Science Applications vs. Universal Display | Science Applications vs. JD SPORTS FASH | Science Applications vs. Constellation Software |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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