Correlation Between Simpson Manufacturing and Nexxen International
Can any of the company-specific risk be diversified away by investing in both Simpson Manufacturing and Nexxen 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 Simpson Manufacturing and Nexxen International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simpson Manufacturing and Nexxen International, you can compare the effects of market volatilities on Simpson Manufacturing and Nexxen 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 Simpson Manufacturing with a short position of Nexxen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simpson Manufacturing and Nexxen International.
Diversification Opportunities for Simpson Manufacturing and Nexxen International
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Simpson and Nexxen is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Simpson Manufacturing and Nexxen International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexxen International 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 Nexxen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexxen International has no effect on the direction of Simpson Manufacturing i.e., Simpson Manufacturing and Nexxen International go up and down completely randomly.
Pair Corralation between Simpson Manufacturing and Nexxen International
Considering the 90-day investment horizon Simpson Manufacturing is expected to generate 3.78 times less return on investment than Nexxen International. But when comparing it to its historical volatility, Simpson Manufacturing is 2.58 times less risky than Nexxen International. It trades about 0.13 of its potential returns per unit of risk. Nexxen International is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 813.00 in Nexxen International on September 2, 2024 and sell it today you would earn a total of 167.00 from holding Nexxen International or generate 20.54% 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. Nexxen International
Performance |
| Timeline |
| Simpson Manufacturing |
| Nexxen International |
Simpson Manufacturing and Nexxen International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simpson Manufacturing and Nexxen International
The main advantage of trading using opposite Simpson Manufacturing and Nexxen International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simpson Manufacturing position performs unexpectedly, Nexxen 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 Nexxen International will offset losses from the drop in Nexxen International's long position.| Simpson Manufacturing vs. West Fraser Timber | Simpson Manufacturing vs. Interfor | Simpson Manufacturing vs. Ufp Industries | Simpson Manufacturing vs. Canfor |
| Nexxen International vs. Newpark Resources | Nexxen International vs. Universal Music Group | Nexxen International vs. Hurco Companies | Nexxen International vs. Simpson Manufacturing |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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