Correlation Between Sims Metal and WESCO International
Can any of the company-specific risk be diversified away by investing in both Sims Metal and WESCO 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 Sims Metal and WESCO International 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 WESCO International, you can compare the effects of market volatilities on Sims Metal and WESCO 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 Sims Metal with a short position of WESCO International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and WESCO International.
Diversification Opportunities for Sims Metal and WESCO International
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sims and WESCO is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and WESCO International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO International 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 WESCO International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESCO International has no effect on the direction of Sims Metal i.e., Sims Metal and WESCO International go up and down completely randomly.
Pair Corralation between Sims Metal and WESCO International
If you would invest 2,600 in WESCO International on August 31, 2024 and sell it today you would earn a total of 12.00 from holding WESCO International or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Sims Metal Management vs. WESCO International
Performance |
| Timeline |
| Sims Metal Management |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| WESCO International |
Sims Metal and WESCO International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and WESCO International
The main advantage of trading using opposite Sims Metal and WESCO International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal position performs unexpectedly, WESCO 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 WESCO International will offset losses from the drop in WESCO International'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 |
| WESCO International vs. SiriusPoint | WESCO International vs. Argo Group International | WESCO International vs. Global Ship Lease | WESCO International vs. Compass Diversified |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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