Correlation Between Algoma Steel and Sweetgreen
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Sweetgreen 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 Sweetgreen 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 Sweetgreen, you can compare the effects of market volatilities on Algoma Steel and Sweetgreen 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 Sweetgreen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Sweetgreen.
Diversification Opportunities for Algoma Steel and Sweetgreen
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Algoma and Sweetgreen is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen 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 Sweetgreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweetgreen has no effect on the direction of Algoma Steel i.e., Algoma Steel and Sweetgreen go up and down completely randomly.
Pair Corralation between Algoma Steel and Sweetgreen
Given the investment horizon of 90 days Algoma Steel is expected to generate 2.09 times less return on investment than Sweetgreen. But when comparing it to its historical volatility, Algoma Steel Group is 1.66 times less risky than Sweetgreen. It trades about 0.08 of its potential returns per unit of risk. Sweetgreen is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,805 in Sweetgreen on September 3, 2024 and sell it today you would earn a total of 293.00 from holding Sweetgreen or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Sweetgreen
Performance |
| Timeline |
| Algoma Steel Group |
| Sweetgreen |
Algoma Steel and Sweetgreen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Sweetgreen
The main advantage of trading using opposite Algoma Steel and Sweetgreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Sweetgreen 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 Sweetgreen will offset losses from the drop in Sweetgreen's long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
| Sweetgreen vs. Highway Holdings Limited | Sweetgreen vs. QCR Holdings | Sweetgreen vs. Partner Communications | Sweetgreen vs. Acumen Pharmaceuticals |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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