Correlation Between AMREP and Simpson Manufacturing
Can any of the company-specific risk be diversified away by investing in both AMREP and Simpson Manufacturing 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 AMREP and Simpson Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMREP and Simpson Manufacturing, you can compare the effects of market volatilities on AMREP and Simpson Manufacturing 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 AMREP with a short position of Simpson Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMREP and Simpson Manufacturing.
Diversification Opportunities for AMREP and Simpson Manufacturing
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AMREP and Simpson is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AMREP and Simpson Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simpson Manufacturing and AMREP 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 AMREP are associated (or correlated) with Simpson Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simpson Manufacturing has no effect on the direction of AMREP i.e., AMREP and Simpson Manufacturing go up and down completely randomly.
Pair Corralation between AMREP and Simpson Manufacturing
Considering the 90-day investment horizon AMREP is expected to under-perform the Simpson Manufacturing. In addition to that, AMREP is 1.83 times more volatile than Simpson Manufacturing. It trades about -0.25 of its total potential returns per unit of risk. Simpson Manufacturing is currently generating about -0.08 per unit of volatility. If you would invest 16,963 in Simpson Manufacturing on December 1, 2024 and sell it today you would lose (523.00) from holding Simpson Manufacturing or give up 3.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMREP vs. Simpson Manufacturing
Performance |
| Timeline |
| AMREP |
| Simpson Manufacturing |
AMREP and Simpson Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMREP and Simpson Manufacturing
The main advantage of trading using opposite AMREP and Simpson Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMREP position performs unexpectedly, Simpson Manufacturing 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 Simpson Manufacturing will offset losses from the drop in Simpson Manufacturing's long position.| AMREP vs. Landsea Homes Corp | AMREP vs. Forestar Group | AMREP vs. Five Point Holdings | AMREP vs. American Realty Investors |
| Simpson Manufacturing vs. West Fraser Timber | Simpson Manufacturing vs. Interfor | Simpson Manufacturing vs. Ufp Industries | Simpson Manufacturing vs. Canfor |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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