Correlation Between SIMS METAL and Corporate Travel
Can any of the company-specific risk be diversified away by investing in both SIMS METAL and Corporate Travel 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 SIMS METAL and Corporate Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMS METAL MGT and Corporate Travel Management, you can compare the effects of market volatilities on SIMS METAL and Corporate Travel 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 SIMS METAL with a short position of Corporate Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and Corporate Travel.
Diversification Opportunities for SIMS METAL and Corporate Travel
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SIMS and Corporate is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and Corporate Travel Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Travel Man and SIMS METAL 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 SIMS METAL MGT are associated (or correlated) with Corporate Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Travel Man has no effect on the direction of SIMS METAL i.e., SIMS METAL and Corporate Travel go up and down completely randomly.
Pair Corralation between SIMS METAL and Corporate Travel
Assuming the 90 days trading horizon SIMS METAL is expected to generate 3.26 times less return on investment than Corporate Travel. But when comparing it to its historical volatility, SIMS METAL MGT is 1.06 times less risky than Corporate Travel. It trades about 0.11 of its potential returns per unit of risk. Corporate Travel Management is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 695.00 in Corporate Travel Management on August 31, 2024 and sell it today you would earn a total of 155.00 from holding Corporate Travel Management or generate 22.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMS METAL MGT vs. Corporate Travel Management
Performance |
| Timeline |
| SIMS METAL MGT |
| Corporate Travel Man |
SIMS METAL and Corporate Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMS METAL and Corporate Travel
The main advantage of trading using opposite SIMS METAL and Corporate Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL position performs unexpectedly, Corporate Travel 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 Corporate Travel will offset losses from the drop in Corporate Travel's long position.| SIMS METAL vs. SENECA FOODS A | SIMS METAL vs. Zijin Mining Group | SIMS METAL vs. LION ONE METALS | SIMS METAL vs. CAL MAINE FOODS |
| Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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