Correlation Between Metro AG and Reliance Steel
Can any of the company-specific risk be diversified away by investing in both Metro AG and Reliance Steel 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 Metro AG and Reliance Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro AG and Reliance Steel Aluminum, you can compare the effects of market volatilities on Metro AG and Reliance Steel 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 Metro AG with a short position of Reliance Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro AG and Reliance Steel.
Diversification Opportunities for Metro AG and Reliance Steel
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Metro and Reliance is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Metro AG and Reliance Steel Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Steel Aluminum and Metro AG 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 Metro AG are associated (or correlated) with Reliance Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Steel Aluminum has no effect on the direction of Metro AG i.e., Metro AG and Reliance Steel go up and down completely randomly.
Pair Corralation between Metro AG and Reliance Steel
Assuming the 90 days trading horizon Metro AG is expected to under-perform the Reliance Steel. In addition to that, Metro AG is 1.93 times more volatile than Reliance Steel Aluminum. It trades about 0.0 of its total potential returns per unit of risk. Reliance Steel Aluminum is currently generating about 0.05 per unit of volatility. If you would invest 21,484 in Reliance Steel Aluminum on September 19, 2024 and sell it today you would earn a total of 6,236 from holding Reliance Steel Aluminum or generate 29.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro AG vs. Reliance Steel Aluminum
Performance |
| Timeline |
| Metro AG |
| Reliance Steel Aluminum |
Metro AG and Reliance Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro AG and Reliance Steel
The main advantage of trading using opposite Metro AG and Reliance Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro AG position performs unexpectedly, Reliance Steel 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 Reliance Steel will offset losses from the drop in Reliance Steel's long position.| Metro AG vs. TYSON FOODS A | Metro AG vs. JJ SNACK FOODS | Metro AG vs. National Beverage Corp | Metro AG vs. Entravision Communications |
| Reliance Steel vs. PT Indofood Sukses | Reliance Steel vs. Highlight Communications AG | Reliance Steel vs. China Communications Services | Reliance Steel vs. Consolidated Communications 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |