Correlation Between Simpson Manufacturing and Stella Jones
Can any of the company-specific risk be diversified away by investing in both Simpson Manufacturing and Stella Jones 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 Stella Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simpson Manufacturing and Stella Jones, you can compare the effects of market volatilities on Simpson Manufacturing and Stella Jones 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 Stella Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simpson Manufacturing and Stella Jones.
Diversification Opportunities for Simpson Manufacturing and Stella Jones
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Simpson and Stella is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Simpson Manufacturing and Stella Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stella Jones 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 Stella Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stella Jones has no effect on the direction of Simpson Manufacturing i.e., Simpson Manufacturing and Stella Jones go up and down completely randomly.
Pair Corralation between Simpson Manufacturing and Stella Jones
Considering the 90-day investment horizon Simpson Manufacturing is expected to generate 0.88 times more return on investment than Stella Jones. However, Simpson Manufacturing is 1.14 times less risky than Stella Jones. It trades about 0.09 of its potential returns per unit of risk. Stella Jones is currently generating about 0.05 per unit of risk. If you would invest 9,111 in Simpson Manufacturing on August 28, 2024 and sell it today you would earn a total of 10,582 from holding Simpson Manufacturing or generate 116.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 83.23% |
Values | Daily Returns |
Simpson Manufacturing vs. Stella Jones
Performance |
Timeline |
Simpson Manufacturing |
Stella Jones |
Simpson Manufacturing and Stella Jones Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Simpson Manufacturing and Stella Jones
The main advantage of trading using opposite Simpson Manufacturing and Stella Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simpson Manufacturing position performs unexpectedly, Stella Jones 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 Stella Jones will offset losses from the drop in Stella Jones' long position.Simpson Manufacturing vs. West Fraser Timber | Simpson Manufacturing vs. Interfor | Simpson Manufacturing vs. Ufp Industries | Simpson Manufacturing vs. Canfor |
Stella Jones vs. Canfor | Stella Jones vs. West Fraser Timber | Stella Jones vs. Interfor | Stella Jones vs. Svenska Cellulosa Aktiebolaget |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance |