Correlation Between SIMS METAL and Volkswagen
Can any of the company-specific risk be diversified away by investing in both SIMS METAL and Volkswagen 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 Volkswagen 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 Volkswagen AG, you can compare the effects of market volatilities on SIMS METAL and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and Volkswagen.
Diversification Opportunities for SIMS METAL and Volkswagen
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SIMS and Volkswagen is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of SIMS METAL i.e., SIMS METAL and Volkswagen go up and down completely randomly.
Pair Corralation between SIMS METAL and Volkswagen
Assuming the 90 days trading horizon SIMS METAL MGT is expected to generate 2.05 times more return on investment than Volkswagen. However, SIMS METAL is 2.05 times more volatile than Volkswagen AG. It trades about 0.11 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.37 per unit of risk. If you would invest 770.00 in SIMS METAL MGT on August 31, 2024 and sell it today you would earn a total of 45.00 from holding SIMS METAL MGT or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMS METAL MGT vs. Volkswagen AG
Performance |
| Timeline |
| SIMS METAL MGT |
| Volkswagen AG |
SIMS METAL and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMS METAL and Volkswagen
The main advantage of trading using opposite SIMS METAL and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen'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 |
| Volkswagen vs. Strategic Investments AS | Volkswagen vs. SIMS METAL MGT | Volkswagen vs. LION ONE METALS | Volkswagen vs. EAT WELL INVESTMENT |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |