Correlation Between BlueScope Steel and AM EAGLE
Can any of the company-specific risk be diversified away by investing in both BlueScope Steel and AM EAGLE 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 BlueScope Steel and AM EAGLE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlueScope Steel Limited and AM EAGLE OUTFITTERS, you can compare the effects of market volatilities on BlueScope Steel and AM EAGLE 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 BlueScope Steel with a short position of AM EAGLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and AM EAGLE.
Diversification Opportunities for BlueScope Steel and AM EAGLE
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BlueScope and AFG is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS and BlueScope 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 BlueScope Steel Limited are associated (or correlated) with AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of BlueScope Steel i.e., BlueScope Steel and AM EAGLE go up and down completely randomly.
Pair Corralation between BlueScope Steel and AM EAGLE
Assuming the 90 days horizon BlueScope Steel Limited is expected to generate 1.05 times more return on investment than AM EAGLE. However, BlueScope Steel is 1.05 times more volatile than AM EAGLE OUTFITTERS. It trades about 0.05 of its potential returns per unit of risk. AM EAGLE OUTFITTERS is currently generating about -0.11 per unit of risk. If you would invest 1,280 in BlueScope Steel Limited on August 29, 2024 and sell it today you would earn a total of 30.00 from holding BlueScope Steel Limited or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BlueScope Steel Limited vs. AM EAGLE OUTFITTERS
Performance |
| Timeline |
| BlueScope Steel |
| AM EAGLE OUTFITTERS |
BlueScope Steel and AM EAGLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueScope Steel and AM EAGLE
The main advantage of trading using opposite BlueScope Steel and AM EAGLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel position performs unexpectedly, AM EAGLE 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 AM EAGLE will offset losses from the drop in AM EAGLE's long position.| BlueScope Steel vs. AM EAGLE OUTFITTERS | BlueScope Steel vs. International Game Technology | BlueScope Steel vs. Apollo Investment Corp | BlueScope Steel vs. Penn National Gaming |
| AM EAGLE vs. Apple Inc | AM EAGLE vs. Apple Inc | AM EAGLE vs. Superior Plus Corp | AM EAGLE vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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