Correlation Between Eskay Mining and Sims Metal
Can any of the company-specific risk be diversified away by investing in both Eskay Mining and Sims Metal 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 Eskay Mining and Sims Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eskay Mining Corp and Sims Metal Management, you can compare the effects of market volatilities on Eskay Mining and Sims Metal 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 Eskay Mining with a short position of Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eskay Mining and Sims Metal.
Diversification Opportunities for Eskay Mining and Sims Metal
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eskay and Sims is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Eskay Mining Corp and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management and Eskay Mining 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 Eskay Mining Corp are associated (or correlated) with Sims Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims Metal Management has no effect on the direction of Eskay Mining i.e., Eskay Mining and Sims Metal go up and down completely randomly.
Pair Corralation between Eskay Mining and Sims Metal
Assuming the 90 days horizon Eskay Mining Corp is expected to generate 4.65 times more return on investment than Sims Metal. However, Eskay Mining is 4.65 times more volatile than Sims Metal Management. It trades about 0.14 of its potential returns per unit of risk. Sims Metal Management is currently generating about 0.09 per unit of risk. If you would invest 12.00 in Eskay Mining Corp on December 7, 2024 and sell it today you would earn a total of 2.00 from holding Eskay Mining Corp or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eskay Mining Corp vs. Sims Metal Management
Performance |
| Timeline |
| Eskay Mining Corp |
| Sims Metal Management |
Eskay Mining and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eskay Mining and Sims Metal
The main advantage of trading using opposite Eskay Mining and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eskay Mining position performs unexpectedly, Sims Metal 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 Sims Metal will offset losses from the drop in Sims Metal's long position.| Eskay Mining vs. Rio Tinto Group | Eskay Mining vs. Anglo American plc | Eskay Mining vs. Mineral Resources Limited | Eskay Mining vs. Liontown Resources Limited |
| Sims Metal vs. Warner Music Group | Sims Metal vs. REVO INSURANCE SPA | Sims Metal vs. GEAR4MUSIC LS 10 | Sims Metal vs. Virtu Financial |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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