Correlation Between Now and Sterling Metals
Can any of the company-specific risk be diversified away by investing in both Now and Sterling Metals 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 Now and Sterling Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Now Inc and Sterling Metals Corp, you can compare the effects of market volatilities on Now and Sterling Metals 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 Now with a short position of Sterling Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Now and Sterling Metals.
Diversification Opportunities for Now and Sterling Metals
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Now and Sterling is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Now Inc and Sterling Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Metals Corp and Now 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 Now Inc are associated (or correlated) with Sterling Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Metals Corp has no effect on the direction of Now i.e., Now and Sterling Metals go up and down completely randomly.
Pair Corralation between Now and Sterling Metals
Given the investment horizon of 90 days Now Inc is expected to generate 0.24 times more return on investment than Sterling Metals. However, Now Inc is 4.22 times less risky than Sterling Metals. It trades about 0.29 of its potential returns per unit of risk. Sterling Metals Corp is currently generating about 0.05 per unit of risk. If you would invest 1,302 in Now Inc on November 5, 2024 and sell it today you would earn a total of 186.00 from holding Now Inc or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Now Inc vs. Sterling Metals Corp
Performance |
| Timeline |
| Now Inc |
| Sterling Metals Corp |
Now and Sterling Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Now and Sterling Metals
The main advantage of trading using opposite Now and Sterling Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Now position performs unexpectedly, Sterling Metals 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 Sterling Metals will offset losses from the drop in Sterling Metals' long position.| Now vs. Oil States International | Now vs. Oceaneering International | Now vs. Geospace Technologies | Now vs. Enerflex |
| Sterling Metals vs. Hannan Metals | Sterling Metals vs. Atco Mining | Sterling Metals vs. Leading Edge Materials | Sterling Metals vs. Arianne Phosphate |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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