Correlation Between Simpson Manufacturing and Chart Industries
Can any of the company-specific risk be diversified away by investing in both Simpson Manufacturing and Chart Industries 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 Chart Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simpson Manufacturing and Chart Industries, you can compare the effects of market volatilities on Simpson Manufacturing and Chart Industries 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 Chart Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simpson Manufacturing and Chart Industries.
Diversification Opportunities for Simpson Manufacturing and Chart Industries
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Simpson and Chart is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Simpson Manufacturing and Chart Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chart Industries 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 Chart Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chart Industries has no effect on the direction of Simpson Manufacturing i.e., Simpson Manufacturing and Chart Industries go up and down completely randomly.
Pair Corralation between Simpson Manufacturing and Chart Industries
Considering the 90-day investment horizon Simpson Manufacturing is expected to generate 7.23 times less return on investment than Chart Industries. But when comparing it to its historical volatility, Simpson Manufacturing is 1.63 times less risky than Chart Industries. It trades about 0.13 of its potential returns per unit of risk. Chart Industries is currently generating about 0.57 of returns per unit of risk over similar time horizon. If you would invest 13,000 in Chart Industries on September 2, 2024 and sell it today you would earn a total of 6,325 from holding Chart Industries or generate 48.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simpson Manufacturing vs. Chart Industries
Performance |
| Timeline |
| Simpson Manufacturing |
| Chart Industries |
Simpson Manufacturing and Chart Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simpson Manufacturing and Chart Industries
The main advantage of trading using opposite Simpson Manufacturing and Chart Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simpson Manufacturing position performs unexpectedly, Chart Industries 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 Chart Industries will offset losses from the drop in Chart Industries' long position.| Simpson Manufacturing vs. West Fraser Timber | Simpson Manufacturing vs. Interfor | Simpson Manufacturing vs. Ufp Industries | Simpson Manufacturing vs. Canfor |
| Chart Industries vs. Crane NXT Co | Chart Industries vs. Donaldson | Chart Industries vs. ITT Inc | Chart Industries vs. Franklin Electric Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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