Correlation Between Sims Metal and Voya Financial
Can any of the company-specific risk be diversified away by investing in both Sims Metal and Voya Financial 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 Voya Financial 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 Voya Financial, you can compare the effects of market volatilities on Sims Metal and Voya Financial 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 Voya Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and Voya Financial.
Diversification Opportunities for Sims Metal and Voya Financial
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sims and Voya is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and Voya Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Financial 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 Voya Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Financial has no effect on the direction of Sims Metal i.e., Sims Metal and Voya Financial go up and down completely randomly.
Pair Corralation between Sims Metal and Voya Financial
Assuming the 90 days horizon Sims Metal Management is expected to generate 1.26 times more return on investment than Voya Financial. However, Sims Metal is 1.26 times more volatile than Voya Financial. It trades about 0.01 of its potential returns per unit of risk. Voya Financial is currently generating about 0.01 per unit of risk. If you would invest 811.00 in Sims Metal Management on October 19, 2024 and sell it today you would lose (21.00) from holding Sims Metal Management or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Sims Metal Management vs. Voya Financial
Performance |
| Timeline |
| Sims Metal Management |
| Voya Financial |
Sims Metal and Voya Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and Voya Financial
The main advantage of trading using opposite Sims Metal and Voya Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal position performs unexpectedly, Voya Financial 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 Voya Financial will offset losses from the drop in Voya Financial's long position.| Sims Metal vs. SWISS WATER DECAFFCOFFEE | Sims Metal vs. Methode Electronics | Sims Metal vs. Renesas Electronics | Sims Metal vs. Luckin Coffee |
| Voya Financial vs. Waste Management | Voya Financial vs. DFS Furniture PLC | Voya Financial vs. Sims Metal Management | Voya Financial vs. American Homes 4 |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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