Correlation Between SIMS METAL and JD SPORTS
Can any of the company-specific risk be diversified away by investing in both SIMS METAL and JD SPORTS 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 JD SPORTS 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 JD SPORTS FASH, you can compare the effects of market volatilities on SIMS METAL and JD SPORTS 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 JD SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and JD SPORTS.
Diversification Opportunities for SIMS METAL and JD SPORTS
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SIMS and 9JD is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and JD SPORTS FASH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD SPORTS FASH 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 JD SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD SPORTS FASH has no effect on the direction of SIMS METAL i.e., SIMS METAL and JD SPORTS go up and down completely randomly.
Pair Corralation between SIMS METAL and JD SPORTS
Assuming the 90 days trading horizon SIMS METAL MGT is expected to generate 0.73 times more return on investment than JD SPORTS. However, SIMS METAL MGT is 1.37 times less risky than JD SPORTS. It trades about 0.04 of its potential returns per unit of risk. JD SPORTS FASH is currently generating about -0.4 per unit of risk. If you would invest 795.00 in SIMS METAL MGT on August 29, 2024 and sell it today you would earn a total of 15.00 from holding SIMS METAL MGT or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SIMS METAL MGT vs. JD SPORTS FASH
Performance |
| Timeline |
| SIMS METAL MGT |
| JD SPORTS FASH |
SIMS METAL and JD SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMS METAL and JD SPORTS
The main advantage of trading using opposite SIMS METAL and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL position performs unexpectedly, JD SPORTS 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 JD SPORTS will offset losses from the drop in JD SPORTS's long position.| SIMS METAL vs. Take Two Interactive Software | SIMS METAL vs. Check Point Software | SIMS METAL vs. AXWAY SOFTWARE EO | SIMS METAL vs. BORR DRILLING NEW |
| JD SPORTS vs. DICKS Sporting Goods | JD SPORTS vs. Sporting Clube de | JD SPORTS vs. Sporttotal AG | JD SPORTS vs. Transportadora de Gas |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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