Correlation Between Sims Metal and COLUMBIA SPORTSWEAR
Can any of the company-specific risk be diversified away by investing in both Sims Metal and COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR, you can compare the effects of market volatilities on Sims Metal and COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and COLUMBIA SPORTSWEAR.
Diversification Opportunities for Sims Metal and COLUMBIA SPORTSWEAR
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sims and COLUMBIA is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and COLUMBIA SPORTSWEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COLUMBIA SPORTSWEAR has no effect on the direction of Sims Metal i.e., Sims Metal and COLUMBIA SPORTSWEAR go up and down completely randomly.
Pair Corralation between Sims Metal and COLUMBIA SPORTSWEAR
Assuming the 90 days horizon Sims Metal Management is expected to generate 1.5 times more return on investment than COLUMBIA SPORTSWEAR. However, Sims Metal is 1.5 times more volatile than COLUMBIA SPORTSWEAR. It trades about 0.01 of its potential returns per unit of risk. COLUMBIA SPORTSWEAR is currently generating about 0.01 per unit of risk. If you would invest 829.00 in Sims Metal Management on September 3, 2024 and sell it today you would lose (29.00) from holding Sims Metal Management or give up 3.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sims Metal Management vs. COLUMBIA SPORTSWEAR
Performance |
| Timeline |
| Sims Metal Management |
| COLUMBIA SPORTSWEAR |
Sims Metal and COLUMBIA SPORTSWEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and COLUMBIA SPORTSWEAR
The main advantage of trading using opposite Sims Metal and COLUMBIA SPORTSWEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal position performs unexpectedly, COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR will offset losses from the drop in COLUMBIA SPORTSWEAR's long position.| Sims Metal vs. ArcelorMittal | Sims Metal vs. Steel Dynamics | Sims Metal vs. NIPPON STEEL SPADR | Sims Metal vs. POSCO Holdings |
| COLUMBIA SPORTSWEAR vs. TOTAL GABON | COLUMBIA SPORTSWEAR vs. Walgreens Boots Alliance | COLUMBIA SPORTSWEAR vs. Peak Resources Limited |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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