Correlation Between Schnitzer Steel and Virco Manufacturing
Can any of the company-specific risk be diversified away by investing in both Schnitzer Steel and Virco Manufacturing 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 Schnitzer Steel and Virco Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schnitzer Steel Industries and Virco Manufacturing, you can compare the effects of market volatilities on Schnitzer Steel and Virco Manufacturing 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 Schnitzer Steel with a short position of Virco Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schnitzer Steel and Virco Manufacturing.
Diversification Opportunities for Schnitzer Steel and Virco Manufacturing
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Schnitzer and Virco is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Schnitzer Steel Industries and Virco Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virco Manufacturing and Schnitzer Steel 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 Schnitzer Steel Industries are associated (or correlated) with Virco Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virco Manufacturing has no effect on the direction of Schnitzer Steel i.e., Schnitzer Steel and Virco Manufacturing go up and down completely randomly.
Pair Corralation between Schnitzer Steel and Virco Manufacturing
Given the investment horizon of 90 days Schnitzer Steel Industries is expected to generate 1.22 times more return on investment than Virco Manufacturing. However, Schnitzer Steel is 1.22 times more volatile than Virco Manufacturing. It trades about 0.12 of its potential returns per unit of risk. Virco Manufacturing is currently generating about 0.04 per unit of risk. If you would invest 1,500 in Schnitzer Steel Industries on August 30, 2024 and sell it today you would earn a total of 471.00 from holding Schnitzer Steel Industries or generate 31.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schnitzer Steel Industries vs. Virco Manufacturing
Performance |
| Timeline |
| Schnitzer Steel Indu |
| Virco Manufacturing |
Schnitzer Steel and Virco Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schnitzer Steel and Virco Manufacturing
The main advantage of trading using opposite Schnitzer Steel and Virco Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schnitzer Steel position performs unexpectedly, Virco Manufacturing 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 Virco Manufacturing will offset losses from the drop in Virco Manufacturing's long position.| Schnitzer Steel vs. Ambev SA ADR | Schnitzer Steel vs. Thai Beverage PCL | Schnitzer Steel vs. Boston Beer | Schnitzer Steel vs. Diageo PLC ADR |
| Virco Manufacturing vs. Bassett Furniture Industries | Virco Manufacturing vs. Hooker Furniture | Virco Manufacturing vs. Natuzzi SpA | Virco Manufacturing vs. Flexsteel Industries |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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