Correlation Between ELL ENVIRONHLDGS and STEEL DYNAMICS
Can any of the company-specific risk be diversified away by investing in both ELL ENVIRONHLDGS and STEEL DYNAMICS 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 ELL ENVIRONHLDGS and STEEL DYNAMICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELL ENVIRONHLDGS HD 0001 and STEEL DYNAMICS, you can compare the effects of market volatilities on ELL ENVIRONHLDGS and STEEL DYNAMICS 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 ELL ENVIRONHLDGS with a short position of STEEL DYNAMICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELL ENVIRONHLDGS and STEEL DYNAMICS.
Diversification Opportunities for ELL ENVIRONHLDGS and STEEL DYNAMICS
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ELL and STEEL is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ELL ENVIRONHLDGS HD 0001 and STEEL DYNAMICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEL DYNAMICS and ELL ENVIRONHLDGS 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 ELL ENVIRONHLDGS HD 0001 are associated (or correlated) with STEEL DYNAMICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEEL DYNAMICS has no effect on the direction of ELL ENVIRONHLDGS i.e., ELL ENVIRONHLDGS and STEEL DYNAMICS go up and down completely randomly.
Pair Corralation between ELL ENVIRONHLDGS and STEEL DYNAMICS
Assuming the 90 days horizon ELL ENVIRONHLDGS HD 0001 is expected to under-perform the STEEL DYNAMICS. But the stock apears to be less risky and, when comparing its historical volatility, ELL ENVIRONHLDGS HD 0001 is 1.1 times less risky than STEEL DYNAMICS. The stock trades about -0.24 of its potential returns per unit of risk. The STEEL DYNAMICS is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 10,964 in STEEL DYNAMICS on November 4, 2024 and sell it today you would earn a total of 1,326 from holding STEEL DYNAMICS or generate 12.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
ELL ENVIRONHLDGS HD 0001 vs. STEEL DYNAMICS
Performance |
| Timeline |
| ELL ENVIRONHLDGS |
| STEEL DYNAMICS |
ELL ENVIRONHLDGS and STEEL DYNAMICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELL ENVIRONHLDGS and STEEL DYNAMICS
The main advantage of trading using opposite ELL ENVIRONHLDGS and STEEL DYNAMICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELL ENVIRONHLDGS position performs unexpectedly, STEEL DYNAMICS 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 STEEL DYNAMICS will offset losses from the drop in STEEL DYNAMICS's long position.| ELL ENVIRONHLDGS vs. Waste Management | ELL ENVIRONHLDGS vs. Republic Services | ELL ENVIRONHLDGS vs. Waste Connections | ELL ENVIRONHLDGS vs. Veolia Environnement SA |
| STEEL DYNAMICS vs. East Africa Metals | STEEL DYNAMICS vs. DICKS Sporting Goods | STEEL DYNAMICS vs. ANTA SPORTS PRODUCT | STEEL DYNAMICS vs. JD SPORTS FASH |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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