Correlation Between Sims and MoneyMe

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Can any of the company-specific risk be diversified away by investing in both Sims and MoneyMe 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 Sims and MoneyMe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sims and MoneyMe, you can compare the effects of market volatilities on Sims and MoneyMe 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 Sims with a short position of MoneyMe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims and MoneyMe.

Diversification Opportunities for Sims and MoneyMe

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Sims and MoneyMe is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sims and MoneyMe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MoneyMe and Sims 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 Sims are associated (or correlated) with MoneyMe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MoneyMe has no effect on the direction of Sims i.e., Sims and MoneyMe go up and down completely randomly.

Pair Corralation between Sims and MoneyMe

Assuming the 90 days trading horizon Sims is expected to under-perform the MoneyMe. But the stock apears to be less risky and, when comparing its historical volatility, Sims is 3.05 times less risky than MoneyMe. The stock trades about -0.22 of its potential returns per unit of risk. The MoneyMe is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  12.00  in MoneyMe on September 24, 2024 and sell it today you would earn a total of  5.00  from holding MoneyMe or generate 41.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sims  vs.  MoneyMe

 Performance 
       Timeline  
Sims 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sims has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Sims is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
MoneyMe 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in MoneyMe are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, MoneyMe unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sims and MoneyMe Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sims and MoneyMe

The main advantage of trading using opposite Sims and MoneyMe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims position performs unexpectedly, MoneyMe 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 MoneyMe will offset losses from the drop in MoneyMe's long position.
The idea behind Sims and MoneyMe 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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