Correlation Between Cleveland Cliffs and Constellium
Can any of the company-specific risk be diversified away by investing in both Cleveland Cliffs and Constellium 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 Cleveland Cliffs and Constellium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cleveland Cliffs and Constellium Nv, you can compare the effects of market volatilities on Cleveland Cliffs and Constellium 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 Cleveland Cliffs with a short position of Constellium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleveland Cliffs and Constellium.
Diversification Opportunities for Cleveland Cliffs and Constellium
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cleveland and Constellium is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cleveland Cliffs and Constellium Nv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellium Nv and Cleveland Cliffs 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 Cleveland Cliffs are associated (or correlated) with Constellium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellium Nv has no effect on the direction of Cleveland Cliffs i.e., Cleveland Cliffs and Constellium go up and down completely randomly.
Pair Corralation between Cleveland Cliffs and Constellium
Considering the 90-day investment horizon Cleveland Cliffs is expected to under-perform the Constellium. In addition to that, Cleveland Cliffs is 1.65 times more volatile than Constellium Nv. It trades about -0.02 of its total potential returns per unit of risk. Constellium Nv is currently generating about -0.01 per unit of volatility. If you would invest 1,179 in Constellium Nv on September 13, 2024 and sell it today you would lose (8.00) from holding Constellium Nv or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cleveland Cliffs vs. Constellium Nv
Performance |
| Timeline |
| Cleveland Cliffs |
| Constellium Nv |
Cleveland Cliffs and Constellium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cleveland Cliffs and Constellium
The main advantage of trading using opposite Cleveland Cliffs and Constellium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleveland Cliffs position performs unexpectedly, Constellium 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 Constellium will offset losses from the drop in Constellium's long position.| Cleveland Cliffs vs. Nucor Corp | Cleveland Cliffs vs. Steel Dynamics | Cleveland Cliffs vs. ArcelorMittal SA ADR | Cleveland Cliffs vs. Gerdau SA ADR |
| Constellium vs. Century Aluminum | Constellium vs. Alcoa Corp | Constellium vs. China Hongqiao Group | Constellium vs. Norsk Hydro ASA |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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