Correlation Between Renesas Electronics and Sims Metal
Can any of the company-specific risk be diversified away by investing in both Renesas Electronics 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 Renesas Electronics and Sims Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Renesas Electronics and Sims Metal Management, you can compare the effects of market volatilities on Renesas Electronics 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 Renesas Electronics with a short position of Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renesas Electronics and Sims Metal.
Diversification Opportunities for Renesas Electronics and Sims Metal
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Renesas and Sims is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Renesas Electronics 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 Renesas Electronics 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 Renesas Electronics 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 Renesas Electronics i.e., Renesas Electronics and Sims Metal go up and down completely randomly.
Pair Corralation between Renesas Electronics and Sims Metal
Assuming the 90 days horizon Renesas Electronics is expected to generate 10.97 times less return on investment than Sims Metal. In addition to that, Renesas Electronics is 1.33 times more volatile than Sims Metal Management. It trades about 0.02 of its total potential returns per unit of risk. Sims Metal Management is currently generating about 0.35 per unit of volatility. If you would invest 700.00 in Sims Metal Management on October 31, 2024 and sell it today you would earn a total of 100.00 from holding Sims Metal Management or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Renesas Electronics vs. Sims Metal Management
Performance |
| Timeline |
| Renesas Electronics |
| Sims Metal Management |
Renesas Electronics and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Renesas Electronics and Sims Metal
The main advantage of trading using opposite Renesas Electronics and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renesas Electronics 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.| Renesas Electronics vs. G8 EDUCATION | Renesas Electronics vs. Gol Intelligent Airlines | Renesas Electronics vs. IDP EDUCATION LTD | Renesas Electronics vs. Xinhua Winshare Publishing |
| Sims Metal vs. MOBILE FACTORY INC | Sims Metal vs. Verizon Communications | Sims Metal vs. ecotel communication ag | Sims Metal vs. GEELY AUTOMOBILE |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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