Correlation Between Bread Financial and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Bread Financial and ArcelorMittal 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 Bread Financial and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bread Financial Holdings and ArcelorMittal SA, you can compare the effects of market volatilities on Bread Financial and ArcelorMittal 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 Bread Financial with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bread Financial and ArcelorMittal.
Diversification Opportunities for Bread Financial and ArcelorMittal
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bread and ArcelorMittal is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bread Financial Holdings and ArcelorMittal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA and Bread Financial 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 Bread Financial Holdings are associated (or correlated) with ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA has no effect on the direction of Bread Financial i.e., Bread Financial and ArcelorMittal go up and down completely randomly.
Pair Corralation between Bread Financial and ArcelorMittal
Assuming the 90 days trading horizon Bread Financial Holdings is expected to generate 1.98 times more return on investment than ArcelorMittal. However, Bread Financial is 1.98 times more volatile than ArcelorMittal SA. It trades about 0.21 of its potential returns per unit of risk. ArcelorMittal SA is currently generating about 0.13 per unit of risk. If you would invest 7,413 in Bread Financial Holdings on September 1, 2024 and sell it today you would earn a total of 1,473 from holding Bread Financial Holdings or generate 19.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Bread Financial Holdings vs. ArcelorMittal SA
Performance |
| Timeline |
| Bread Financial Holdings |
| ArcelorMittal SA |
Bread Financial and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bread Financial and ArcelorMittal
The main advantage of trading using opposite Bread Financial and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bread Financial position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.| Bread Financial vs. Lloyds Banking Group | Bread Financial vs. Capital One Financial | Bread Financial vs. T Mobile | Bread Financial vs. SVB Financial Group |
| ArcelorMittal vs. Micron Technology | ArcelorMittal vs. Marfrig Global Foods | ArcelorMittal vs. Agilent Technologies | ArcelorMittal vs. Ross Stores |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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