Correlation Between Charter Communications and Sims Metal
Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and Sims Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Sims Metal Management, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Sims Metal.
Diversification Opportunities for Charter Communications and Sims Metal
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Charter and Sims is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications 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 Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Sims Metal go up and down completely randomly.
Pair Corralation between Charter Communications and Sims Metal
Assuming the 90 days trading horizon Charter Communications is expected to generate 1.09 times more return on investment than Sims Metal. However, Charter Communications is 1.09 times more volatile than Sims Metal Management. It trades about 0.01 of its potential returns per unit of risk. Sims Metal Management is currently generating about 0.01 per unit of risk. If you would invest 36,250 in Charter Communications on September 3, 2024 and sell it today you would earn a total of 825.00 from holding Charter Communications or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Communications vs. Sims Metal Management
Performance |
| Timeline |
| Charter Communications |
| Sims Metal Management |
Charter Communications and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Sims Metal
The main advantage of trading using opposite Charter Communications and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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.| Charter Communications vs. Playa Hotels Resorts | Charter Communications vs. NH HOTEL GROUP | Charter Communications vs. RYU Apparel | Charter Communications vs. Pebblebrook Hotel Trust |
| Sims Metal vs. ArcelorMittal | Sims Metal vs. Steel Dynamics | Sims Metal vs. NIPPON STEEL SPADR | Sims Metal vs. POSCO Holdings |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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