Correlation Between Sims Metal and SLR Investment
Can any of the company-specific risk be diversified away by investing in both Sims Metal and SLR Investment 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 SLR Investment 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 SLR Investment Corp, you can compare the effects of market volatilities on Sims Metal and SLR Investment 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 SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and SLR Investment.
Diversification Opportunities for Sims Metal and SLR Investment
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sims and SLR is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Sims Metal i.e., Sims Metal and SLR Investment go up and down completely randomly.
Pair Corralation between Sims Metal and SLR Investment
Assuming the 90 days horizon Sims Metal is expected to generate 4.92 times less return on investment than SLR Investment. In addition to that, Sims Metal is 1.76 times more volatile than SLR Investment Corp. It trades about 0.01 of its total potential returns per unit of risk. SLR Investment Corp is currently generating about 0.07 per unit of volatility. If you would invest 1,040 in SLR Investment Corp on September 16, 2024 and sell it today you would earn a total of 528.00 from holding SLR Investment Corp or generate 50.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sims Metal Management vs. SLR Investment Corp
Performance |
| Timeline |
| Sims Metal Management |
| SLR Investment Corp |
Sims Metal and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and SLR Investment
The main advantage of trading using opposite Sims Metal and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's long position.| Sims Metal vs. BW OFFSHORE LTD | Sims Metal vs. Axcelis Technologies | Sims Metal vs. Uber Technologies | Sims Metal vs. THORNEY TECHS LTD |
| SLR Investment vs. Ameriprise Financial | SLR Investment vs. Ares Management Corp | SLR Investment vs. Superior Plus Corp | SLR Investment vs. SIVERS SEMICONDUCTORS AB |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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