Correlation Between SIMS METAL and Gruppo Mutuionline
Can any of the company-specific risk be diversified away by investing in both SIMS METAL and Gruppo Mutuionline 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 Gruppo Mutuionline 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 Gruppo Mutuionline SpA, you can compare the effects of market volatilities on SIMS METAL and Gruppo Mutuionline 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 Gruppo Mutuionline. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and Gruppo Mutuionline.
Diversification Opportunities for SIMS METAL and Gruppo Mutuionline
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between SIMS and Gruppo is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and Gruppo Mutuionline SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gruppo Mutuionline SpA 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 Gruppo Mutuionline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gruppo Mutuionline SpA has no effect on the direction of SIMS METAL i.e., SIMS METAL and Gruppo Mutuionline go up and down completely randomly.
Pair Corralation between SIMS METAL and Gruppo Mutuionline
Assuming the 90 days trading horizon SIMS METAL is expected to generate 8.14 times less return on investment than Gruppo Mutuionline. In addition to that, SIMS METAL is 1.06 times more volatile than Gruppo Mutuionline SpA. It trades about 0.01 of its total potential returns per unit of risk. Gruppo Mutuionline SpA is currently generating about 0.04 per unit of volatility. If you would invest 2,610 in Gruppo Mutuionline SpA on August 24, 2024 and sell it today you would earn a total of 1,080 from holding Gruppo Mutuionline SpA or generate 41.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMS METAL MGT vs. Gruppo Mutuionline SpA
Performance |
| Timeline |
| SIMS METAL MGT |
| Gruppo Mutuionline SpA |
SIMS METAL and Gruppo Mutuionline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMS METAL and Gruppo Mutuionline
The main advantage of trading using opposite SIMS METAL and Gruppo Mutuionline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL position performs unexpectedly, Gruppo Mutuionline 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 Gruppo Mutuionline will offset losses from the drop in Gruppo Mutuionline's long position.The idea behind SIMS METAL MGT and Gruppo Mutuionline SpA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Gruppo Mutuionline vs. BROADSTNET LEADL 00025 | Gruppo Mutuionline vs. 24SEVENOFFICE GROUP AB | Gruppo Mutuionline vs. Fukuyama Transporting Co | Gruppo Mutuionline vs. Haier Smart Home |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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