Correlation Between ArcelorMittal and United States
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and United States 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 United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ArcelorMittal and United States Steel, you can compare the effects of market volatilities on ArcelorMittal and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and United States.
Diversification Opportunities for ArcelorMittal and United States
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ArcelorMittal and United is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and United States go up and down completely randomly.
Pair Corralation between ArcelorMittal and United States
Assuming the 90 days trading horizon ArcelorMittal is expected to generate 48.76 times less return on investment than United States. But when comparing it to its historical volatility, ArcelorMittal is 1.53 times less risky than United States. It trades about 0.0 of its potential returns per unit of risk. United States Steel is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,469 in United States Steel on August 30, 2024 and sell it today you would earn a total of 1,284 from holding United States Steel or generate 52.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ArcelorMittal vs. United States Steel
Performance |
| Timeline |
| ArcelorMittal |
| United States Steel |
ArcelorMittal and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and United States
The main advantage of trading using opposite ArcelorMittal and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| ArcelorMittal vs. Steel Dynamics | ArcelorMittal vs. Superior Plus Corp | ArcelorMittal vs. SIVERS SEMICONDUCTORS AB | ArcelorMittal vs. Identiv |
| United States vs. Steel Dynamics | United States vs. Superior Plus Corp | United States vs. SIVERS SEMICONDUCTORS AB | United States vs. Identiv |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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