Correlation Between SIMS METAL and Bank Of
Can any of the company-specific risk be diversified away by investing in both SIMS METAL and Bank Of 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 Bank Of 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 The Bank of, you can compare the effects of market volatilities on SIMS METAL and Bank Of 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 Bank Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and Bank Of.
Diversification Opportunities for SIMS METAL and Bank Of
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SIMS and Bank is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Bank 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 Bank Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Bank has no effect on the direction of SIMS METAL i.e., SIMS METAL and Bank Of go up and down completely randomly.
Pair Corralation between SIMS METAL and Bank Of
Assuming the 90 days trading horizon SIMS METAL MGT is expected to under-perform the Bank Of. In addition to that, SIMS METAL is 1.73 times more volatile than The Bank of. It trades about -0.02 of its total potential returns per unit of risk. The Bank of is currently generating about 0.04 per unit of volatility. If you would invest 7,373 in The Bank of on September 20, 2024 and sell it today you would earn a total of 72.00 from holding The Bank of or generate 0.98% 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. The Bank of
Performance |
| Timeline |
| SIMS METAL MGT |
| The Bank |
SIMS METAL and Bank Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMS METAL and Bank Of
The main advantage of trading using opposite SIMS METAL and Bank Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL position performs unexpectedly, Bank Of 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 Bank Of will offset losses from the drop in Bank Of's long position.| SIMS METAL vs. INSURANCE AUST GRP | SIMS METAL vs. Evolution Mining Limited | SIMS METAL vs. United Insurance Holdings | SIMS METAL vs. Singapore Reinsurance |
| Bank Of vs. Chesapeake Utilities | Bank Of vs. Axcelis Technologies | Bank Of vs. SIMS METAL MGT | Bank Of vs. Lion Biotechnologies |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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