Correlation Between Sims Metal and NEXA RESOURCES
Can any of the company-specific risk be diversified away by investing in both Sims Metal and NEXA RESOURCES 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 NEXA RESOURCES 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 NEXA RESOURCES SA, you can compare the effects of market volatilities on Sims Metal and NEXA RESOURCES 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 NEXA RESOURCES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and NEXA RESOURCES.
Diversification Opportunities for Sims Metal and NEXA RESOURCES
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sims and NEXA is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and NEXA RESOURCES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXA RESOURCES SA 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 NEXA RESOURCES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXA RESOURCES SA has no effect on the direction of Sims Metal i.e., Sims Metal and NEXA RESOURCES go up and down completely randomly.
Pair Corralation between Sims Metal and NEXA RESOURCES
Assuming the 90 days horizon Sims Metal is expected to generate 1.78 times less return on investment than NEXA RESOURCES. In addition to that, Sims Metal is 1.21 times more volatile than NEXA RESOURCES SA. It trades about 0.01 of its total potential returns per unit of risk. NEXA RESOURCES SA is currently generating about 0.03 per unit of volatility. If you would invest 710.00 in NEXA RESOURCES SA on August 30, 2024 and sell it today you would earn a total of 5.00 from holding NEXA RESOURCES SA or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sims Metal Management vs. NEXA RESOURCES SA
Performance |
| Timeline |
| Sims Metal Management |
| NEXA RESOURCES SA |
Sims Metal and NEXA RESOURCES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and NEXA RESOURCES
The main advantage of trading using opposite Sims Metal and NEXA RESOURCES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal position performs unexpectedly, NEXA RESOURCES 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 NEXA RESOURCES will offset losses from the drop in NEXA RESOURCES's long position.| Sims Metal vs. Steel Dynamics | Sims Metal vs. Superior Plus Corp | Sims Metal vs. SIVERS SEMICONDUCTORS AB | Sims Metal vs. Identiv |
| NEXA RESOURCES vs. Sims Metal Management | NEXA RESOURCES vs. Waste Management | NEXA RESOURCES vs. CEOTRONICS | NEXA RESOURCES vs. PRECISION DRILLING P |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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