Correlation Between De Grey and Sims Metal
Can any of the company-specific risk be diversified away by investing in both De Grey 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 De Grey and Sims Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and Sims Metal Management, you can compare the effects of market volatilities on De Grey 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 De Grey with a short position of Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and Sims Metal.
Diversification Opportunities for De Grey and Sims Metal
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DGD and Sims is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining 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 De Grey 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 De Grey Mining 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 De Grey i.e., De Grey and Sims Metal go up and down completely randomly.
Pair Corralation between De Grey and Sims Metal
Assuming the 90 days trading horizon De Grey Mining is expected to generate 2.38 times more return on investment than Sims Metal. However, De Grey is 2.38 times more volatile than Sims Metal Management. It trades about 0.18 of its potential returns per unit of risk. Sims Metal Management is currently generating about 0.07 per unit of risk. If you would invest 83.00 in De Grey Mining on October 16, 2024 and sell it today you would earn a total of 32.00 from holding De Grey Mining or generate 38.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.37% |
| Values | Daily Returns |
De Grey Mining vs. Sims Metal Management
Performance |
| Timeline |
| De Grey Mining |
| Sims Metal Management |
De Grey and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and Sims Metal
The main advantage of trading using opposite De Grey and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey 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.| De Grey vs. US Physical Therapy | De Grey vs. JAPAN AIRLINES | De Grey vs. Acadia Healthcare | De Grey vs. NIGHTINGALE HEALTH EO |
| Sims Metal vs. Jacquet Metal Service | Sims Metal vs. De Grey Mining | Sims Metal vs. Federal Agricultural Mortgage | Sims Metal vs. Dairy Farm International |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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