Correlation Between Sky Metals and Group 6
Can any of the company-specific risk be diversified away by investing in both Sky Metals and Group 6 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 Sky Metals and Group 6 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Metals and Group 6 Metals, you can compare the effects of market volatilities on Sky Metals and Group 6 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 Sky Metals with a short position of Group 6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Metals and Group 6.
Diversification Opportunities for Sky Metals and Group 6
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sky and Group is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals and Group 6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 6 Metals and Sky Metals 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 Sky Metals are associated (or correlated) with Group 6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 6 Metals has no effect on the direction of Sky Metals i.e., Sky Metals and Group 6 go up and down completely randomly.
Pair Corralation between Sky Metals and Group 6
Assuming the 90 days trading horizon Sky Metals is expected to generate 3.17 times more return on investment than Group 6. However, Sky Metals is 3.17 times more volatile than Group 6 Metals. It trades about 0.18 of its potential returns per unit of risk. Group 6 Metals is currently generating about 0.05 per unit of risk. If you would invest 3.40 in Sky Metals on September 14, 2024 and sell it today you would earn a total of 2.10 from holding Sky Metals or generate 61.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sky Metals vs. Group 6 Metals
Performance |
Timeline |
Sky Metals |
Group 6 Metals |
Sky Metals and Group 6 Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sky Metals and Group 6
The main advantage of trading using opposite Sky Metals and Group 6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals position performs unexpectedly, Group 6 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 Group 6 will offset losses from the drop in Group 6's long position.Sky Metals vs. Phoslock Environmental Technologies | Sky Metals vs. Oneview Healthcare PLC | Sky Metals vs. Charter Hall Education | Sky Metals vs. Vulcan Steel |
Group 6 vs. Insignia Financial | Group 6 vs. Pioneer Credit | Group 6 vs. Legacy Iron Ore | Group 6 vs. Tombador Iron |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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