Correlation Between Sims Metal and MUTUIONLINE
Can any of the company-specific risk be diversified away by investing in both Sims Metal and MUTUIONLINE 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 MUTUIONLINE 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 MUTUIONLINE, you can compare the effects of market volatilities on Sims Metal and MUTUIONLINE 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 MUTUIONLINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and MUTUIONLINE.
Diversification Opportunities for Sims Metal and MUTUIONLINE
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sims and MUTUIONLINE is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and MUTUIONLINE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MUTUIONLINE 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 MUTUIONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MUTUIONLINE has no effect on the direction of Sims Metal i.e., Sims Metal and MUTUIONLINE go up and down completely randomly.
Pair Corralation between Sims Metal and MUTUIONLINE
Assuming the 90 days horizon Sims Metal Management is expected to under-perform the MUTUIONLINE. In addition to that, Sims Metal is 1.15 times more volatile than MUTUIONLINE. It trades about -0.13 of its total potential returns per unit of risk. MUTUIONLINE is currently generating about 0.07 per unit of volatility. If you would invest 3,735 in MUTUIONLINE on September 22, 2024 and sell it today you would earn a total of 95.00 from holding MUTUIONLINE or generate 2.54% 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. MUTUIONLINE
Performance |
| Timeline |
| Sims Metal Management |
| MUTUIONLINE |
Sims Metal and MUTUIONLINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and MUTUIONLINE
The main advantage of trading using opposite Sims Metal and MUTUIONLINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal position performs unexpectedly, MUTUIONLINE 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 MUTUIONLINE will offset losses from the drop in MUTUIONLINE's long position.| Sims Metal vs. Nucor | Sims Metal vs. ArcelorMittal SA | Sims Metal vs. ArcelorMittal | Sims Metal vs. Steel Dynamics |
| MUTUIONLINE vs. National Retail Properties | MUTUIONLINE vs. New Residential Investment | MUTUIONLINE vs. AGNC INVESTMENT | MUTUIONLINE vs. AEON STORES |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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