Correlation Between Simpson Manufacturing and Aldel Financial
Can any of the company-specific risk be diversified away by investing in both Simpson Manufacturing and Aldel Financial 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 Simpson Manufacturing and Aldel Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simpson Manufacturing and Aldel Financial II, you can compare the effects of market volatilities on Simpson Manufacturing and Aldel Financial 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 Simpson Manufacturing with a short position of Aldel Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simpson Manufacturing and Aldel Financial.
Diversification Opportunities for Simpson Manufacturing and Aldel Financial
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Simpson and Aldel is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Simpson Manufacturing and Aldel Financial II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldel Financial II and Simpson Manufacturing 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 Simpson Manufacturing are associated (or correlated) with Aldel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldel Financial II has no effect on the direction of Simpson Manufacturing i.e., Simpson Manufacturing and Aldel Financial go up and down completely randomly.
Pair Corralation between Simpson Manufacturing and Aldel Financial
Considering the 90-day investment horizon Simpson Manufacturing is expected to generate 18.41 times more return on investment than Aldel Financial. However, Simpson Manufacturing is 18.41 times more volatile than Aldel Financial II. It trades about 0.07 of its potential returns per unit of risk. Aldel Financial II is currently generating about 0.0 per unit of risk. If you would invest 16,177 in Simpson Manufacturing on September 2, 2024 and sell it today you would earn a total of 2,663 from holding Simpson Manufacturing or generate 16.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 23.02% |
| Values | Daily Returns |
Simpson Manufacturing vs. Aldel Financial II
Performance |
| Timeline |
| Simpson Manufacturing |
| Aldel Financial II |
Simpson Manufacturing and Aldel Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simpson Manufacturing and Aldel Financial
The main advantage of trading using opposite Simpson Manufacturing and Aldel Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simpson Manufacturing position performs unexpectedly, Aldel Financial 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 Aldel Financial will offset losses from the drop in Aldel Financial's long position.| Simpson Manufacturing vs. West Fraser Timber | Simpson Manufacturing vs. Interfor | Simpson Manufacturing vs. Ufp Industries | Simpson Manufacturing vs. Canfor |
| Aldel Financial vs. Stepan Company | Aldel Financial vs. Apogee Enterprises | Aldel Financial vs. Sphere Entertainment Co | Aldel Financial vs. Radcom |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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