Correlation Between Sims Metal and Global Industrial
Can any of the company-specific risk be diversified away by investing in both Sims Metal and Global Industrial 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 Metal and Global Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sims Metal Management and Global Industrial Co, you can compare the effects of market volatilities on Sims Metal and Global Industrial 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 Metal with a short position of Global Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and Global Industrial.
Diversification Opportunities for Sims Metal and Global Industrial
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sims and Global is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and Global Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Industrial and Sims Metal 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 Metal Management are associated (or correlated) with Global Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Industrial has no effect on the direction of Sims Metal i.e., Sims Metal and Global Industrial go up and down completely randomly.
Pair Corralation between Sims Metal and Global Industrial
If you would invest 1,030 in Sims Metal Management on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Sims Metal Management or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
Sims Metal Management vs. Global Industrial Co
Performance |
| Timeline |
| Sims Metal Management |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Global Industrial |
Sims Metal and Global Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and Global Industrial
The main advantage of trading using opposite Sims Metal and Global Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal position performs unexpectedly, Global Industrial 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 Global Industrial will offset losses from the drop in Global Industrial's long position.| Sims Metal vs. Steel Dynamics | Sims Metal vs. Cleveland Cliffs | Sims Metal vs. United States Steel | Sims Metal vs. ArcelorMittal SA ADR |
| Global Industrial vs. Distribution Solutions Group | Global Industrial vs. Core Main | Global Industrial vs. Applied Industrial Technologies | Global Industrial vs. BlueLinx Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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