Correlation Between Sims Metal and NORWEGIAN AIR
Can any of the company-specific risk be diversified away by investing in both Sims Metal and NORWEGIAN AIR 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 NORWEGIAN AIR 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 NORWEGIAN AIR SHUT, you can compare the effects of market volatilities on Sims Metal and NORWEGIAN AIR 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 NORWEGIAN AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and NORWEGIAN AIR.
Diversification Opportunities for Sims Metal and NORWEGIAN AIR
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sims and NORWEGIAN is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and NORWEGIAN AIR SHUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORWEGIAN AIR SHUT 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 NORWEGIAN AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORWEGIAN AIR SHUT has no effect on the direction of Sims Metal i.e., Sims Metal and NORWEGIAN AIR go up and down completely randomly.
Pair Corralation between Sims Metal and NORWEGIAN AIR
Assuming the 90 days horizon Sims Metal Management is expected to generate 0.73 times more return on investment than NORWEGIAN AIR. However, Sims Metal Management is 1.38 times less risky than NORWEGIAN AIR. It trades about 0.35 of its potential returns per unit of risk. NORWEGIAN AIR SHUT is currently generating about -0.07 per unit of risk. If you would invest 705.00 in Sims Metal Management on October 26, 2024 and sell it today you would earn a total of 95.00 from holding Sims Metal Management or generate 13.48% 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. NORWEGIAN AIR SHUT
Performance |
| Timeline |
| Sims Metal Management |
| NORWEGIAN AIR SHUT |
Sims Metal and NORWEGIAN AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and NORWEGIAN AIR
The main advantage of trading using opposite Sims Metal and NORWEGIAN AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal position performs unexpectedly, NORWEGIAN AIR 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 NORWEGIAN AIR will offset losses from the drop in NORWEGIAN AIR's long position.| Sims Metal vs. British American Tobacco | Sims Metal vs. Regal Hotels International | Sims Metal vs. InterContinental Hotels Group | Sims Metal vs. Sunstone Hotel Investors |
| NORWEGIAN AIR vs. MeVis Medical Solutions | NORWEGIAN AIR vs. IMAGIN MEDICAL INC | NORWEGIAN AIR vs. Sims Metal Management | NORWEGIAN AIR 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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