Correlation Between Sylvamo Corp and Mercer International
Can any of the company-specific risk be diversified away by investing in both Sylvamo Corp and Mercer International 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 Sylvamo Corp and Mercer International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sylvamo Corp and Mercer International, you can compare the effects of market volatilities on Sylvamo Corp and Mercer International 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 Sylvamo Corp with a short position of Mercer International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sylvamo Corp and Mercer International.
Diversification Opportunities for Sylvamo Corp and Mercer International
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sylvamo and Mercer is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sylvamo Corp and Mercer International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercer International and Sylvamo Corp 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 Sylvamo Corp are associated (or correlated) with Mercer International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercer International has no effect on the direction of Sylvamo Corp i.e., Sylvamo Corp and Mercer International go up and down completely randomly.
Pair Corralation between Sylvamo Corp and Mercer International
Given the investment horizon of 90 days Sylvamo Corp is expected to under-perform the Mercer International. In addition to that, Sylvamo Corp is 1.02 times more volatile than Mercer International. It trades about -0.01 of its total potential returns per unit of risk. Mercer International is currently generating about 0.06 per unit of volatility. If you would invest 637.00 in Mercer International on November 1, 2024 and sell it today you would earn a total of 49.00 from holding Mercer International or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sylvamo Corp vs. Mercer International
Performance |
| Timeline |
| Sylvamo Corp |
| Mercer International |
Sylvamo Corp and Mercer International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sylvamo Corp and Mercer International
The main advantage of trading using opposite Sylvamo Corp and Mercer International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sylvamo Corp position performs unexpectedly, Mercer International 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 Mercer International will offset losses from the drop in Mercer International's long position.| Sylvamo Corp vs. Mercer International | Sylvamo Corp vs. Suzano Papel e | Sylvamo Corp vs. UPM Kymmene Oyj | Sylvamo Corp vs. Clearwater Paper |
| Mercer International vs. Sylvamo Corp | Mercer International vs. Suzano Papel e | Mercer International vs. UPM Kymmene Oyj | Mercer International vs. Clearwater Paper |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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