Correlation Between Bluescope Steel and Iodm
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Iodm 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 Iodm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Iodm, you can compare the effects of market volatilities on Bluescope Steel and Iodm 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 Iodm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Iodm.
Diversification Opportunities for Bluescope Steel and Iodm
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bluescope and Iodm is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Iodm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iodm 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 are associated (or correlated) with Iodm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iodm has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Iodm go up and down completely randomly.
Pair Corralation between Bluescope Steel and Iodm
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.4 times more return on investment than Iodm. However, Bluescope Steel is 2.53 times less risky than Iodm. It trades about 0.25 of its potential returns per unit of risk. Iodm is currently generating about -0.09 per unit of risk. If you would invest 1,933 in Bluescope Steel on October 25, 2024 and sell it today you would earn a total of 116.00 from holding Bluescope Steel or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Iodm
Performance |
| Timeline |
| Bluescope Steel |
| Iodm |
Bluescope Steel and Iodm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Iodm
The main advantage of trading using opposite Bluescope Steel and Iodm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Iodm 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 Iodm will offset losses from the drop in Iodm's long position.| Bluescope Steel vs. Ras Technology Holdings | Bluescope Steel vs. Dicker Data | Bluescope Steel vs. Everest Metals | Bluescope Steel vs. Bio Gene Technology |
| Iodm vs. Phoslock Environmental Technologies | Iodm vs. Bluescope Steel | Iodm vs. Cosmo Metals | Iodm vs. Sky Metals |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |