Correlation Between Sims Metal and MEDICAL FACILITIES
Can any of the company-specific risk be diversified away by investing in both Sims Metal and MEDICAL FACILITIES 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 MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW, you can compare the effects of market volatilities on Sims Metal and MEDICAL FACILITIES 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 MEDICAL FACILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and MEDICAL FACILITIES.
Diversification Opportunities for Sims Metal and MEDICAL FACILITIES
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sims and MEDICAL is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and MEDICAL FACILITIES NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDICAL FACILITIES NEW 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 MEDICAL FACILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDICAL FACILITIES NEW has no effect on the direction of Sims Metal i.e., Sims Metal and MEDICAL FACILITIES go up and down completely randomly.
Pair Corralation between Sims Metal and MEDICAL FACILITIES
Assuming the 90 days horizon Sims Metal is expected to generate 1.22 times less return on investment than MEDICAL FACILITIES. In addition to that, Sims Metal is 1.04 times more volatile than MEDICAL FACILITIES NEW. It trades about 0.06 of its total potential returns per unit of risk. MEDICAL FACILITIES NEW is currently generating about 0.08 per unit of volatility. If you would invest 872.00 in MEDICAL FACILITIES NEW on September 22, 2024 and sell it today you would earn a total of 188.00 from holding MEDICAL FACILITIES NEW or generate 21.56% 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. MEDICAL FACILITIES NEW
Performance |
| Timeline |
| Sims Metal Management |
| MEDICAL FACILITIES NEW |
Sims Metal and MEDICAL FACILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and MEDICAL FACILITIES
The main advantage of trading using opposite Sims Metal and MEDICAL FACILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal position performs unexpectedly, MEDICAL FACILITIES 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 MEDICAL FACILITIES will offset losses from the drop in MEDICAL FACILITIES's long position.| Sims Metal vs. Nucor | Sims Metal vs. ArcelorMittal SA | Sims Metal vs. ArcelorMittal | Sims Metal vs. Steel Dynamics |
| MEDICAL FACILITIES vs. Cardinal Health | MEDICAL FACILITIES vs. National Health Investors | MEDICAL FACILITIES vs. FEMALE HEALTH | MEDICAL FACILITIES vs. EPSILON HEALTHCARE LTD |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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