Correlation Between STORE ELECTRONIC and SIERRA METALS
Can any of the company-specific risk be diversified away by investing in both STORE ELECTRONIC and SIERRA METALS 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 STORE ELECTRONIC and SIERRA METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STORE ELECTRONIC and SIERRA METALS, you can compare the effects of market volatilities on STORE ELECTRONIC and SIERRA METALS 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 STORE ELECTRONIC with a short position of SIERRA METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of STORE ELECTRONIC and SIERRA METALS.
Diversification Opportunities for STORE ELECTRONIC and SIERRA METALS
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between STORE and SIERRA is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding STORE ELECTRONIC and SIERRA METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIERRA METALS and STORE ELECTRONIC 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 STORE ELECTRONIC are associated (or correlated) with SIERRA METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIERRA METALS has no effect on the direction of STORE ELECTRONIC i.e., STORE ELECTRONIC and SIERRA METALS go up and down completely randomly.
Pair Corralation between STORE ELECTRONIC and SIERRA METALS
Assuming the 90 days trading horizon STORE ELECTRONIC is expected to generate 1.41 times more return on investment than SIERRA METALS. However, STORE ELECTRONIC is 1.41 times more volatile than SIERRA METALS. It trades about 0.39 of its potential returns per unit of risk. SIERRA METALS is currently generating about 0.13 per unit of risk. If you would invest 13,380 in STORE ELECTRONIC on October 13, 2024 and sell it today you would earn a total of 3,800 from holding STORE ELECTRONIC or generate 28.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STORE ELECTRONIC vs. SIERRA METALS
Performance |
| Timeline |
| STORE ELECTRONIC |
| SIERRA METALS |
STORE ELECTRONIC and SIERRA METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STORE ELECTRONIC and SIERRA METALS
The main advantage of trading using opposite STORE ELECTRONIC and SIERRA METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STORE ELECTRONIC position performs unexpectedly, SIERRA METALS 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 SIERRA METALS will offset losses from the drop in SIERRA METALS's long position.| STORE ELECTRONIC vs. SILICON LABORATOR | STORE ELECTRONIC vs. GRENKELEASING Dusseldorf | STORE ELECTRONIC vs. China BlueChemical | STORE ELECTRONIC vs. AIR PRODCHEMICALS |
| SIERRA METALS vs. SCOTT TECHNOLOGY | SIERRA METALS vs. BJs Wholesale Club | SIERRA METALS vs. BURLINGTON STORES | SIERRA METALS vs. MACOM Technology Solutions |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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