Correlation Between ArcelorMittal and Mesabi Trust
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Mesabi Trust 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 ArcelorMittal and Mesabi Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ArcelorMittal SA and Mesabi Trust, you can compare the effects of market volatilities on ArcelorMittal and Mesabi Trust 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 ArcelorMittal with a short position of Mesabi Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Mesabi Trust.
Diversification Opportunities for ArcelorMittal and Mesabi Trust
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ArcelorMittal and Mesabi is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA and Mesabi Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesabi Trust and ArcelorMittal 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 ArcelorMittal SA are associated (or correlated) with Mesabi Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesabi Trust has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Mesabi Trust go up and down completely randomly.
Pair Corralation between ArcelorMittal and Mesabi Trust
Assuming the 90 days horizon ArcelorMittal SA is expected to generate 1.86 times more return on investment than Mesabi Trust. However, ArcelorMittal is 1.86 times more volatile than Mesabi Trust. It trades about 0.26 of its potential returns per unit of risk. Mesabi Trust is currently generating about 0.13 per unit of risk. If you would invest 2,260 in ArcelorMittal SA on August 28, 2024 and sell it today you would earn a total of 250.00 from holding ArcelorMittal SA or generate 11.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 57.14% |
| Values | Daily Returns |
ArcelorMittal SA vs. Mesabi Trust
Performance |
| Timeline |
| ArcelorMittal SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Mesabi Trust |
ArcelorMittal and Mesabi Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Mesabi Trust
The main advantage of trading using opposite ArcelorMittal and Mesabi Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Mesabi Trust 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 Mesabi Trust will offset losses from the drop in Mesabi Trust's long position.| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Mesabi Trust | ArcelorMittal vs. Universal Stainless Alloy | ArcelorMittal vs. POSCO Holdings |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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