Correlation Between Commercial Metals and Synalloy
Can any of the company-specific risk be diversified away by investing in both Commercial Metals and Synalloy 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 Commercial Metals and Synalloy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Metals and Synalloy, you can compare the effects of market volatilities on Commercial Metals and Synalloy 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 Commercial Metals with a short position of Synalloy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Metals and Synalloy.
Diversification Opportunities for Commercial Metals and Synalloy
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commercial and Synalloy is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Metals and Synalloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synalloy and Commercial Metals 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 Commercial Metals are associated (or correlated) with Synalloy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synalloy has no effect on the direction of Commercial Metals i.e., Commercial Metals and Synalloy go up and down completely randomly.
Pair Corralation between Commercial Metals and Synalloy
Considering the 90-day investment horizon Commercial Metals is expected to generate 1.58 times less return on investment than Synalloy. But when comparing it to its historical volatility, Commercial Metals is 1.11 times less risky than Synalloy. It trades about 0.01 of its potential returns per unit of risk. Synalloy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,053 in Synalloy on November 9, 2024 and sell it today you would earn a total of 62.00 from holding Synalloy or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Metals vs. Synalloy
Performance |
| Timeline |
| Commercial Metals |
| Synalloy |
Commercial Metals and Synalloy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Metals and Synalloy
The main advantage of trading using opposite Commercial Metals and Synalloy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Metals position performs unexpectedly, Synalloy 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 Synalloy will offset losses from the drop in Synalloy's long position.| Commercial Metals vs. Olympic Steel | Commercial Metals vs. Steel Dynamics | Commercial Metals vs. Nucor Corp | Commercial Metals vs. POSCO Holdings |
| Synalloy vs. Grupo Simec SAB | Synalloy vs. Mesabi Trust | Synalloy vs. Algoma Steel Group | Synalloy vs. Aperam PK |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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