Correlation Between Commercial Metals and Friedman Industries
Can any of the company-specific risk be diversified away by investing in both Commercial Metals and Friedman Industries 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 Friedman Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Metals and Friedman Industries, you can compare the effects of market volatilities on Commercial Metals and Friedman Industries 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 Friedman Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Metals and Friedman Industries.
Diversification Opportunities for Commercial Metals and Friedman Industries
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Commercial and Friedman is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Metals and Friedman Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Friedman Industries 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 Friedman Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Friedman Industries has no effect on the direction of Commercial Metals i.e., Commercial Metals and Friedman Industries go up and down completely randomly.
Pair Corralation between Commercial Metals and Friedman Industries
Considering the 90-day investment horizon Commercial Metals is expected to generate 1.8 times less return on investment than Friedman Industries. But when comparing it to its historical volatility, Commercial Metals is 1.79 times less risky than Friedman Industries. It trades about 0.05 of its potential returns per unit of risk. Friedman Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 988.00 in Friedman Industries on August 31, 2024 and sell it today you would earn a total of 535.00 from holding Friedman Industries or generate 54.15% 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. Friedman Industries
Performance |
| Timeline |
| Commercial Metals |
| Friedman Industries |
Commercial Metals and Friedman Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Metals and Friedman Industries
The main advantage of trading using opposite Commercial Metals and Friedman Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Metals position performs unexpectedly, Friedman Industries 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 Friedman Industries will offset losses from the drop in Friedman Industries' long position.| Commercial Metals vs. Nucor Corp | Commercial Metals vs. Steel Dynamics | Commercial Metals vs. ArcelorMittal SA ADR | Commercial Metals vs. Gerdau SA ADR |
| Friedman Industries vs. ArcelorMittal SA | Friedman Industries vs. Aperam PK | Friedman Industries vs. Acerinox SA ADR | Friedman Industries vs. Algoma Steel Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |