Correlation Between Sims Metal and Nike
Can any of the company-specific risk be diversified away by investing in both Sims Metal and Nike 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 Nike 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 Nike Inc, you can compare the effects of market volatilities on Sims Metal and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and Nike.
Diversification Opportunities for Sims Metal and Nike
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sims and Nike is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Sims Metal i.e., Sims Metal and Nike go up and down completely randomly.
Pair Corralation between Sims Metal and Nike
Assuming the 90 days horizon Sims Metal Management is expected to generate 1.07 times more return on investment than Nike. However, Sims Metal is 1.07 times more volatile than Nike Inc. It trades about 0.0 of its potential returns per unit of risk. Nike Inc is currently generating about -0.03 per unit of risk. If you would invest 834.00 in Sims Metal Management on September 19, 2024 and sell it today you would lose (84.00) from holding Sims Metal Management or give up 10.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sims Metal Management vs. Nike Inc
Performance |
| Timeline |
| Sims Metal Management |
| Nike Inc |
Sims Metal and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and Nike
The main advantage of trading using opposite Sims Metal and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.| Sims Metal vs. Reliance Steel Aluminum | Sims Metal vs. Superior Plus Corp | Sims Metal vs. SIVERS SEMICONDUCTORS AB | Sims Metal vs. Norsk Hydro ASA |
| Nike vs. Take Two Interactive Software | Nike vs. Sims Metal Management | Nike vs. AXWAY SOFTWARE EO | Nike vs. Cleanaway Waste Management |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |