Correlation Between Quebecor and Sims Metal
Can any of the company-specific risk be diversified away by investing in both Quebecor 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 Quebecor and Sims Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quebecor and Sims Metal Management, you can compare the effects of market volatilities on Quebecor 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 Quebecor with a short position of Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quebecor and Sims Metal.
Diversification Opportunities for Quebecor and Sims Metal
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Quebecor and Sims is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Quebecor 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 Quebecor 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 Quebecor 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 Quebecor i.e., Quebecor and Sims Metal go up and down completely randomly.
Pair Corralation between Quebecor and Sims Metal
Assuming the 90 days horizon Quebecor is expected to under-perform the Sims Metal. But the stock apears to be less risky and, when comparing its historical volatility, Quebecor is 1.68 times less risky than Sims Metal. The stock trades about -0.06 of its potential returns per unit of risk. The Sims Metal Management is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 755.00 in Sims Metal Management on September 2, 2024 and sell it today you would earn a total of 45.00 from holding Sims Metal Management or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quebecor vs. Sims Metal Management
Performance |
| Timeline |
| Quebecor |
| Sims Metal Management |
Quebecor and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quebecor and Sims Metal
The main advantage of trading using opposite Quebecor and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quebecor 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.| Quebecor vs. Perma Fix Environmental Services | Quebecor vs. Insteel Industries | Quebecor vs. Highlight Communications AG | Quebecor vs. MITSUBISHI STEEL MFG |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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