Correlation Between SIMS METAL and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both SIMS METAL and Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics, you can compare the effects of market volatilities on SIMS METAL and Arrow Electronics 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 Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and Arrow Electronics.
Diversification Opportunities for SIMS METAL and Arrow Electronics
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SIMS and Arrow is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of SIMS METAL i.e., SIMS METAL and Arrow Electronics go up and down completely randomly.
Pair Corralation between SIMS METAL and Arrow Electronics
Assuming the 90 days trading horizon SIMS METAL MGT is expected to under-perform the Arrow Electronics. But the stock apears to be less risky and, when comparing its historical volatility, SIMS METAL MGT is 1.07 times less risky than Arrow Electronics. The stock trades about -0.11 of its potential returns per unit of risk. The Arrow Electronics is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 12,300 in Arrow Electronics on September 26, 2024 and sell it today you would lose (1,300) from holding Arrow Electronics or give up 10.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMS METAL MGT vs. Arrow Electronics
Performance |
| Timeline |
| SIMS METAL MGT |
| Arrow Electronics |
SIMS METAL and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMS METAL and Arrow Electronics
The main advantage of trading using opposite SIMS METAL and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| SIMS METAL vs. Chuangs China Investments | SIMS METAL vs. PennantPark Investment | SIMS METAL vs. EAT WELL INVESTMENT | SIMS METAL vs. REINET INVESTMENTS SCA |
| Arrow Electronics vs. Transportadora de Gas | Arrow Electronics vs. SIMS METAL MGT | Arrow Electronics vs. PLAYSTUDIOS A DL 0001 | Arrow Electronics vs. Playa Hotels Resorts |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |