Correlation Between Sims Metal and Chegg
Can any of the company-specific risk be diversified away by investing in both Sims Metal and Chegg 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 Chegg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sims Metal Management and Chegg Inc, you can compare the effects of market volatilities on Sims Metal and Chegg 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 Chegg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and Chegg.
Diversification Opportunities for Sims Metal and Chegg
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sims and Chegg is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and Chegg Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chegg Inc 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 Management are associated (or correlated) with Chegg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chegg Inc has no effect on the direction of Sims Metal i.e., Sims Metal and Chegg go up and down completely randomly.
Pair Corralation between Sims Metal and Chegg
Assuming the 90 days horizon Sims Metal Management is expected to generate 0.46 times more return on investment than Chegg. However, Sims Metal Management is 2.16 times less risky than Chegg. It trades about 0.12 of its potential returns per unit of risk. Chegg Inc is currently generating about -0.29 per unit of risk. If you would invest 765.00 in Sims Metal Management on October 14, 2024 and sell it today you would earn a total of 35.00 from holding Sims Metal Management or generate 4.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sims Metal Management vs. Chegg Inc
Performance |
| Timeline |
| Sims Metal Management |
| Chegg Inc |
Sims Metal and Chegg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and Chegg
The main advantage of trading using opposite Sims Metal and Chegg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal position performs unexpectedly, Chegg 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 Chegg will offset losses from the drop in Chegg's long position.| Sims Metal vs. Nucor | Sims Metal vs. Reliance Steel Aluminum | Sims Metal vs. Superior Plus Corp | Sims Metal vs. NMI Holdings |
| Chegg vs. Jacquet Metal Service | Chegg vs. Waste Management | Chegg vs. Brockhaus Capital Management | Chegg vs. Sims Metal Management |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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