Correlation Between Constellium and Nucor Corp
Can any of the company-specific risk be diversified away by investing in both Constellium and Nucor Corp 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 Constellium and Nucor Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellium Nv and Nucor Corp, you can compare the effects of market volatilities on Constellium and Nucor Corp 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 Constellium with a short position of Nucor Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellium and Nucor Corp.
Diversification Opportunities for Constellium and Nucor Corp
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Constellium and Nucor is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Constellium Nv and Nucor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucor Corp and Constellium 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 Constellium Nv are associated (or correlated) with Nucor Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nucor Corp has no effect on the direction of Constellium i.e., Constellium and Nucor Corp go up and down completely randomly.
Pair Corralation between Constellium and Nucor Corp
Given the investment horizon of 90 days Constellium Nv is expected to under-perform the Nucor Corp. In addition to that, Constellium is 1.37 times more volatile than Nucor Corp. It trades about -0.04 of its total potential returns per unit of risk. Nucor Corp is currently generating about 0.0 per unit of volatility. If you would invest 16,247 in Nucor Corp on September 4, 2024 and sell it today you would lose (749.00) from holding Nucor Corp or give up 4.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellium Nv vs. Nucor Corp
Performance |
| Timeline |
| Constellium Nv |
| Nucor Corp |
Constellium and Nucor Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellium and Nucor Corp
The main advantage of trading using opposite Constellium and Nucor Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellium position performs unexpectedly, Nucor Corp 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 Nucor Corp will offset losses from the drop in Nucor Corp's long position.| Constellium vs. Century Aluminum | Constellium vs. Alcoa Corp | Constellium vs. China Hongqiao Group | Constellium vs. Norsk Hydro ASA |
| Nucor Corp vs. Constellium Nv | Nucor Corp vs. Century Aluminum | Nucor Corp vs. China Hongqiao Group | Nucor Corp vs. Kaiser Aluminum |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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