Correlation Between EMBARK EDUCATION and Sims Metal
Can any of the company-specific risk be diversified away by investing in both EMBARK EDUCATION 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 EMBARK EDUCATION and Sims Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMBARK EDUCATION LTD and Sims Metal Management, you can compare the effects of market volatilities on EMBARK EDUCATION 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 EMBARK EDUCATION with a short position of Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMBARK EDUCATION and Sims Metal.
Diversification Opportunities for EMBARK EDUCATION and Sims Metal
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EMBARK and Sims is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding EMBARK EDUCATION LTD 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 EMBARK EDUCATION 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 EMBARK EDUCATION LTD 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 EMBARK EDUCATION i.e., EMBARK EDUCATION and Sims Metal go up and down completely randomly.
Pair Corralation between EMBARK EDUCATION and Sims Metal
Assuming the 90 days horizon EMBARK EDUCATION LTD is expected to generate 0.27 times more return on investment than Sims Metal. However, EMBARK EDUCATION LTD is 3.64 times less risky than Sims Metal. It trades about 0.12 of its potential returns per unit of risk. Sims Metal Management is currently generating about 0.0 per unit of risk. If you would invest 26.00 in EMBARK EDUCATION LTD on October 29, 2024 and sell it today you would earn a total of 5.00 from holding EMBARK EDUCATION LTD or generate 19.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMBARK EDUCATION LTD vs. Sims Metal Management
Performance |
| Timeline |
| EMBARK EDUCATION LTD |
| Sims Metal Management |
EMBARK EDUCATION and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMBARK EDUCATION and Sims Metal
The main advantage of trading using opposite EMBARK EDUCATION and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMBARK EDUCATION 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.| EMBARK EDUCATION vs. VIENNA INSURANCE GR | EMBARK EDUCATION vs. Sims Metal Management | EMBARK EDUCATION vs. China Reinsurance | EMBARK EDUCATION vs. QBE Insurance Group |
| Sims Metal vs. Nucor | Sims Metal vs. ArcelorMittal SA | Sims Metal vs. ArcelorMittal | Sims Metal vs. Steel Dynamics |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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