Correlation Between Sims Metal and LANDSEA GREEN
Can any of the company-specific risk be diversified away by investing in both Sims Metal and LANDSEA GREEN 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 LANDSEA GREEN 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 LANDSEA GREEN MANAGEMENT, you can compare the effects of market volatilities on Sims Metal and LANDSEA GREEN 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 LANDSEA GREEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and LANDSEA GREEN.
Diversification Opportunities for Sims Metal and LANDSEA GREEN
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sims and LANDSEA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and LANDSEA GREEN MANAGEMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANDSEA GREEN MANAGEMENT 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 LANDSEA GREEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANDSEA GREEN MANAGEMENT has no effect on the direction of Sims Metal i.e., Sims Metal and LANDSEA GREEN go up and down completely randomly.
Pair Corralation between Sims Metal and LANDSEA GREEN
Assuming the 90 days horizon Sims Metal is expected to generate 277.68 times less return on investment than LANDSEA GREEN. But when comparing it to its historical volatility, Sims Metal Management is 34.38 times less risky than LANDSEA GREEN. It trades about 0.01 of its potential returns per unit of risk. LANDSEA GREEN MANAGEMENT is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1.30 in LANDSEA GREEN MANAGEMENT on September 16, 2024 and sell it today you would lose (1.20) from holding LANDSEA GREEN MANAGEMENT or give up 92.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sims Metal Management vs. LANDSEA GREEN MANAGEMENT
Performance |
| Timeline |
| Sims Metal Management |
| LANDSEA GREEN MANAGEMENT |
Sims Metal and LANDSEA GREEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and LANDSEA GREEN
The main advantage of trading using opposite Sims Metal and LANDSEA GREEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal position performs unexpectedly, LANDSEA GREEN 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 LANDSEA GREEN will offset losses from the drop in LANDSEA GREEN's long position.| Sims Metal vs. BW OFFSHORE LTD | Sims Metal vs. Axcelis Technologies | Sims Metal vs. Uber Technologies | Sims Metal vs. THORNEY TECHS LTD |
| LANDSEA GREEN vs. Superior Plus Corp | LANDSEA GREEN vs. NMI Holdings | LANDSEA GREEN vs. SIVERS SEMICONDUCTORS AB | LANDSEA GREEN vs. NorAm Drilling AS |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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