Correlation Between SIERRA METALS and Cummins
Can any of the company-specific risk be diversified away by investing in both SIERRA METALS and Cummins 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 SIERRA METALS and Cummins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIERRA METALS and Cummins, you can compare the effects of market volatilities on SIERRA METALS and Cummins 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 SIERRA METALS with a short position of Cummins. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIERRA METALS and Cummins.
Diversification Opportunities for SIERRA METALS and Cummins
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SIERRA and Cummins is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding SIERRA METALS and Cummins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cummins and SIERRA METALS 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 SIERRA METALS are associated (or correlated) with Cummins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cummins has no effect on the direction of SIERRA METALS i.e., SIERRA METALS and Cummins go up and down completely randomly.
Pair Corralation between SIERRA METALS and Cummins
Assuming the 90 days trading horizon SIERRA METALS is expected to generate 1.04 times more return on investment than Cummins. However, SIERRA METALS is 1.04 times more volatile than Cummins. It trades about 0.24 of its potential returns per unit of risk. Cummins is currently generating about 0.07 per unit of risk. If you would invest 55.00 in SIERRA METALS on November 3, 2024 and sell it today you would earn a total of 6.00 from holding SIERRA METALS or generate 10.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIERRA METALS vs. Cummins
Performance |
| Timeline |
| SIERRA METALS |
| Cummins |
SIERRA METALS and Cummins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIERRA METALS and Cummins
The main advantage of trading using opposite SIERRA METALS and Cummins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIERRA METALS position performs unexpectedly, Cummins 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 Cummins will offset losses from the drop in Cummins' long position.| SIERRA METALS vs. SIVERS SEMICONDUCTORS AB | SIERRA METALS vs. NorAm Drilling AS | SIERRA METALS vs. Volkswagen AG | SIERRA METALS vs. Darden Restaurants |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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