Correlation Between Navigator Global and Sims

Can any of the company-specific risk be diversified away by investing in both Navigator Global and Sims 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 Navigator Global and Sims into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Navigator Global Investments and Sims, you can compare the effects of market volatilities on Navigator Global and Sims 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 Navigator Global with a short position of Sims. Check out your portfolio center. Please also check ongoing floating volatility patterns of Navigator Global and Sims.

Diversification Opportunities for Navigator Global and Sims

0.36

Correlation Coefficient

Navigator Global  Sims

Weak diversification

The 3 months correlation between Navigator and Sims is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Navigator Global Investments and Sims in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims and Navigator Global 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 Navigator Global Investments are associated (or correlated) with Sims. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims has no effect on the direction of Navigator Global i.e., Navigator Global and Sims go up and down completely randomly.

Pair Corralation between Navigator Global and Sims

Assuming the 90 days trading horizon Navigator Global is expected to generate 1.74 times less return on investment than Sims. In addition to that, Navigator Global is 1.77 times more volatile than Sims. It trades about 0.09 of its total potential returns per unit of risk. Sims is currently generating about 0.26 per unit of volatility. If you would invest  1,181  in Sims on December 22, 2024 and sell it today you would earn a total of  361.00  from holding Sims or generate 30.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Navigator Global Investments  vs.  Sims

Navigator Global Inv

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Navigator Global Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Navigator Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sims

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sims are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Sims unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Navigator Global and Sims

The main advantage of trading using opposite Navigator Global and Sims positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navigator Global position performs unexpectedly, Sims 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 Sims will offset losses from the drop in Sims' long position.

The idea behind Navigator Global Investments and Sims pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.