Correlation Between Sims and Greenvale Energy
Can any of the company-specific risk be diversified away by investing in both Sims and Greenvale Energy 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 Sims and Greenvale Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sims and Greenvale Energy, you can compare the effects of market volatilities on Sims and Greenvale Energy 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 Sims with a short position of Greenvale Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims and Greenvale Energy.
Diversification Opportunities for Sims and Greenvale Energy
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sims and Greenvale is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sims and Greenvale Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenvale Energy and Sims 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 Sims are associated (or correlated) with Greenvale Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenvale Energy has no effect on the direction of Sims i.e., Sims and Greenvale Energy go up and down completely randomly.
Pair Corralation between Sims and Greenvale Energy
Assuming the 90 days trading horizon Sims is expected to generate 0.29 times more return on investment than Greenvale Energy. However, Sims is 3.46 times less risky than Greenvale Energy. It trades about 0.01 of its potential returns per unit of risk. Greenvale Energy is currently generating about -0.01 per unit of risk. If you would invest 1,270 in Sims on September 13, 2024 and sell it today you would earn a total of 20.00 from holding Sims or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sims vs. Greenvale Energy
Performance |
| Timeline |
| Sims |
| Greenvale Energy |
Sims and Greenvale Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims and Greenvale Energy
The main advantage of trading using opposite Sims and Greenvale Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims position performs unexpectedly, Greenvale Energy 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 Greenvale Energy will offset losses from the drop in Greenvale Energy's long position.| Sims vs. Fisher Paykel Healthcare | Sims vs. Ramsay Health Care | Sims vs. COAST ENTERTAINMENT HOLDINGS | Sims vs. Charter Hall Retail |
| Greenvale Energy vs. Westpac Banking | Greenvale Energy vs. ABACUS STORAGE KING | Greenvale Energy vs. Odyssey Energy | Greenvale Energy vs. Sims |
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 Stocks Directory module to find actively traded stocks across global markets.
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