Correlation Between Cleveland Cliffs and Worthington Steel
Can any of the company-specific risk be diversified away by investing in both Cleveland Cliffs and Worthington 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 Cleveland Cliffs and Worthington Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cleveland Cliffs and Worthington Steel, you can compare the effects of market volatilities on Cleveland Cliffs and Worthington 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 Cleveland Cliffs with a short position of Worthington Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleveland Cliffs and Worthington Steel.
Diversification Opportunities for Cleveland Cliffs and Worthington Steel
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cleveland and Worthington is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cleveland Cliffs and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel 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 Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of Cleveland Cliffs i.e., Cleveland Cliffs and Worthington Steel go up and down completely randomly.
Pair Corralation between Cleveland Cliffs and Worthington Steel
Considering the 90-day investment horizon Cleveland Cliffs is expected to under-perform the Worthington Steel. But the stock apears to be less risky and, when comparing its historical volatility, Cleveland Cliffs is 1.35 times less risky than Worthington Steel. The stock trades about 0.0 of its potential returns per unit of risk. The Worthington Steel is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,461 in Worthington Steel on September 2, 2024 and sell it today you would earn a total of 2,023 from holding Worthington Steel or generate 82.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 51.41% |
| Values | Daily Returns |
Cleveland Cliffs vs. Worthington Steel
Performance |
| Timeline |
| Cleveland Cliffs |
| Worthington Steel |
Cleveland Cliffs and Worthington Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cleveland Cliffs and Worthington Steel
The main advantage of trading using opposite Cleveland Cliffs and Worthington Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleveland Cliffs position performs unexpectedly, Worthington 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 Worthington Steel will offset losses from the drop in Worthington Steel'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 |
| Worthington Steel vs. Aspen Insurance Holdings | Worthington Steel vs. Nike Inc | Worthington Steel vs. Old Republic International | Worthington Steel vs. Sable Offshore Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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