Correlation Between Commercial Metals and Worthington Steel
Can any of the company-specific risk be diversified away by investing in both Commercial Metals 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 Commercial Metals and Worthington Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Metals and Worthington Steel, you can compare the effects of market volatilities on Commercial Metals 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 Commercial Metals with a short position of Worthington Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Metals and Worthington Steel.
Diversification Opportunities for Commercial Metals and Worthington Steel
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Commercial and Worthington is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Metals and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel 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 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 Commercial Metals i.e., Commercial Metals and Worthington Steel go up and down completely randomly.
Pair Corralation between Commercial Metals and Worthington Steel
Considering the 90-day investment horizon Commercial Metals is expected to generate 2.27 times less return on investment than Worthington Steel. But when comparing it to its historical volatility, Commercial Metals is 1.1 times less risky than Worthington Steel. It trades about 0.11 of its potential returns per unit of risk. Worthington Steel is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,401 in Worthington Steel on August 30, 2024 and sell it today you would earn a total of 1,068 from holding Worthington Steel or generate 31.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Metals vs. Worthington Steel
Performance |
| Timeline |
| Commercial Metals |
| Worthington Steel |
Commercial Metals and Worthington Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Metals and Worthington Steel
The main advantage of trading using opposite Commercial Metals and Worthington Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Metals 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.| Commercial Metals vs. Olympic Steel | Commercial Metals vs. Steel Dynamics | Commercial Metals vs. Nucor Corp | Commercial Metals vs. Universal Stainless Alloy |
| Worthington Steel vs. Sonida Senior Living | Worthington Steel vs. Vishay Intertechnology | Worthington Steel vs. HUTCHMED DRC | Worthington Steel vs. Teleflex Incorporated |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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