Correlation Between United States and SIMON

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

By analyzing existing cross correlation between United States Steel and SIMON PPTY GROUP, you can compare the effects of market volatilities on United States and SIMON 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 United States with a short position of SIMON. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and SIMON.

Diversification Opportunities for United States and SIMON

-0.13

Correlation Coefficient

United States  SIMON

Good diversification

The 3 months correlation between United and SIMON is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and SIMON PPTY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMON PPTY GROUP and United States 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 United States Steel are associated (or correlated) with SIMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMON PPTY GROUP has no effect on the direction of United States i.e., United States and SIMON go up and down completely randomly.

Pair Corralation between United States and SIMON

Taking into account the 90-day investment horizon United States is expected to generate 57.18 times less return on investment than SIMON. But when comparing it to its historical volatility, United States Steel is 25.22 times less risky than SIMON. It trades about 0.03 of its potential returns per unit of risk. SIMON PPTY GROUP is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8,645  in SIMON PPTY GROUP on September 16, 2024 and sell it today you would earn a total of  444.00  from holding SIMON PPTY GROUP or generate 5.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.32%
Values	Daily Returns

United States Steel  vs.  SIMON PPTY GROUP

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, United States is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SIMON PPTY GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMON PPTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SIMON PPTY GROUP investors.

Pair Trading with United States and SIMON

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

The idea behind United States Steel and SIMON PPTY GROUP 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.