Correlation Between NCR Voyix and Simpson Manufacturing

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

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

Diversification Opportunities for NCR Voyix and Simpson Manufacturing

0.64

Correlation Coefficient

NCR Voyix  Simpson Manufacturing

Poor diversification

The 3 months correlation between NCR and Simpson is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding NCR Voyix and Simpson Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simpson Manufacturing and NCR Voyix 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 NCR Voyix are associated (or correlated) with Simpson Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simpson Manufacturing has no effect on the direction of NCR Voyix i.e., NCR Voyix and Simpson Manufacturing go up and down completely randomly.

Pair Corralation between NCR Voyix and Simpson Manufacturing

Considering the 90-day investment horizon NCR Voyix is expected to under-perform the Simpson Manufacturing. In addition to that, NCR Voyix is 1.56 times more volatile than Simpson Manufacturing. It trades about -0.23 of its total potential returns per unit of risk. Simpson Manufacturing is currently generating about -0.07 per unit of volatility. If you would invest  16,752  in Simpson Manufacturing on December 24, 2024 and sell it today you would lose (1,207) from holding Simpson Manufacturing or give up 7.21% of portfolio value over 90 days.

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

NCR Voyix  vs.  Simpson Manufacturing

NCR Voyix

Risk-Adjusted Performance

Very Weak

Over the last 90 days NCR Voyix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Simpson Manufacturing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simpson Manufacturing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with NCR Voyix and Simpson Manufacturing

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

The idea behind NCR Voyix and Simpson Manufacturing 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.