Correlation Between SIMS METAL and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both SIMS METAL and Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment, you can compare the effects of market volatilities on SIMS METAL and Gladstone Investment 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 Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and Gladstone Investment.
Diversification Opportunities for SIMS METAL and Gladstone Investment
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SIMS and Gladstone is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of SIMS METAL i.e., SIMS METAL and Gladstone Investment go up and down completely randomly.
Pair Corralation between SIMS METAL and Gladstone Investment
Assuming the 90 days trading horizon SIMS METAL is expected to generate 8.49 times less return on investment than Gladstone Investment. In addition to that, SIMS METAL is 1.34 times more volatile than Gladstone Investment. It trades about 0.0 of its total potential returns per unit of risk. Gladstone Investment is currently generating about 0.06 per unit of volatility. If you would invest 885.00 in Gladstone Investment on August 31, 2024 and sell it today you would earn a total of 385.00 from holding Gladstone Investment or generate 43.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMS METAL MGT vs. Gladstone Investment
Performance |
| Timeline |
| SIMS METAL MGT |
| Gladstone Investment |
SIMS METAL and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMS METAL and Gladstone Investment
The main advantage of trading using opposite SIMS METAL and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment'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 |
| Gladstone Investment vs. QUEEN S ROAD | Gladstone Investment vs. Air Transport Services | Gladstone Investment vs. Gold Road Resources | Gladstone Investment vs. GOLD ROAD RES |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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