Correlation Between ALGOMA STEEL and ITALIAN WINE
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and ITALIAN WINE 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 ALGOMA STEEL and ITALIAN WINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALGOMA STEEL GROUP and ITALIAN WINE BRANDS, you can compare the effects of market volatilities on ALGOMA STEEL and ITALIAN WINE 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 ALGOMA STEEL with a short position of ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and ITALIAN WINE.
Diversification Opportunities for ALGOMA STEEL and ITALIAN WINE
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ALGOMA and ITALIAN is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS and ALGOMA STEEL 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 ALGOMA STEEL GROUP are associated (or correlated) with ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and ITALIAN WINE go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and ITALIAN WINE
Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to under-perform the ITALIAN WINE. In addition to that, ALGOMA STEEL is 1.5 times more volatile than ITALIAN WINE BRANDS. It trades about -0.24 of its total potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about 0.12 per unit of volatility. If you would invest 2,160 in ITALIAN WINE BRANDS on September 12, 2024 and sell it today you would earn a total of 70.00 from holding ITALIAN WINE BRANDS or generate 3.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALGOMA STEEL GROUP vs. ITALIAN WINE BRANDS
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| ITALIAN WINE BRANDS |
ALGOMA STEEL and ITALIAN WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and ITALIAN WINE
The main advantage of trading using opposite ALGOMA STEEL and ITALIAN WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, ITALIAN WINE 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 ITALIAN WINE will offset losses from the drop in ITALIAN WINE's long position.| ALGOMA STEEL vs. ArcelorMittal | ALGOMA STEEL vs. NIPPON STEEL SPADR | ALGOMA STEEL vs. Reliance Steel Aluminum | ALGOMA STEEL vs. Superior Plus Corp |
| ITALIAN WINE vs. Fast Retailing Co | ITALIAN WINE vs. United Natural Foods | ITALIAN WINE vs. AUSTEVOLL SEAFOOD | ITALIAN WINE vs. ASSOC BR FOODS |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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