Correlation Between Sims Metal and VULCAN MATERIALS
Can any of the company-specific risk be diversified away by investing in both Sims Metal and VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS, you can compare the effects of market volatilities on Sims Metal and VULCAN MATERIALS 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 VULCAN MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and VULCAN MATERIALS.
Diversification Opportunities for Sims Metal and VULCAN MATERIALS
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sims and VULCAN is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and VULCAN MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VULCAN MATERIALS 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 VULCAN MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VULCAN MATERIALS has no effect on the direction of Sims Metal i.e., Sims Metal and VULCAN MATERIALS go up and down completely randomly.
Pair Corralation between Sims Metal and VULCAN MATERIALS
Assuming the 90 days horizon Sims Metal Management is expected to generate 1.24 times more return on investment than VULCAN MATERIALS. However, Sims Metal is 1.24 times more volatile than VULCAN MATERIALS. It trades about 0.05 of its potential returns per unit of risk. VULCAN MATERIALS is currently generating about 0.0 per unit of risk. If you would invest 697.00 in Sims Metal Management on December 4, 2024 and sell it today you would earn a total of 153.00 from holding Sims Metal Management or generate 21.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sims Metal Management vs. VULCAN MATERIALS
Performance |
| Timeline |
| Sims Metal Management |
| VULCAN MATERIALS |
Sims Metal and VULCAN MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and VULCAN MATERIALS
The main advantage of trading using opposite Sims Metal and VULCAN MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal position performs unexpectedly, VULCAN MATERIALS 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 VULCAN MATERIALS will offset losses from the drop in VULCAN MATERIALS's long position.| Sims Metal vs. Lippo Malls Indonesia | Sims Metal vs. H2O Retailing | Sims Metal vs. Tradeweb Markets | Sims Metal vs. Platinum Investment Management |
| VULCAN MATERIALS vs. Monument Mining Limited | VULCAN MATERIALS vs. MINCO SILVER | VULCAN MATERIALS vs. China Foods Limited | VULCAN MATERIALS vs. Yanzhou Coal Mining |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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