Correlation Between Algoma Steel and Wilmington Capital
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Wilmington Capital 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 Wilmington Capital 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 Wilmington Capital Management, you can compare the effects of market volatilities on Algoma Steel and Wilmington Capital 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 Wilmington Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Wilmington Capital.
Diversification Opportunities for Algoma Steel and Wilmington Capital
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Algoma and Wilmington is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital 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 Wilmington Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Capital has no effect on the direction of Algoma Steel i.e., Algoma Steel and Wilmington Capital go up and down completely randomly.
Pair Corralation between Algoma Steel and Wilmington Capital
Assuming the 90 days trading horizon Algoma Steel is expected to generate 1.28 times less return on investment than Wilmington Capital. But when comparing it to its historical volatility, Algoma Steel Group is 1.6 times less risky than Wilmington Capital. It trades about 0.03 of its potential returns per unit of risk. Wilmington Capital Management is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 218.00 in Wilmington Capital Management on October 27, 2024 and sell it today you would earn a total of 12.00 from holding Wilmington Capital Management or generate 5.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Wilmington Capital Management
Performance |
| Timeline |
| Algoma Steel Group |
| Wilmington Capital |
Algoma Steel and Wilmington Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Wilmington Capital
The main advantage of trading using opposite Algoma Steel and Wilmington Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Wilmington Capital 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 Wilmington Capital will offset losses from the drop in Wilmington Capital's long position.| Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Champion Iron | Algoma Steel vs. Ero Copper Corp | Algoma Steel vs. West Fraser Timber |
| Wilmington Capital vs. Marimaca Copper Corp | Wilmington Capital vs. Ramp Metals | Wilmington Capital vs. Endeavour Silver Corp | Wilmington Capital vs. Metalero Mining Corp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |