Correlation Between Constellium and United States
Can any of the company-specific risk be diversified away by investing in both Constellium and United States 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 United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellium Nv and United States Steel, you can compare the effects of market volatilities on Constellium and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellium and United States.
Diversification Opportunities for Constellium and United States
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Constellium and United is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Constellium Nv and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Constellium i.e., Constellium and United States go up and down completely randomly.
Pair Corralation between Constellium and United States
Given the investment horizon of 90 days Constellium Nv is expected to under-perform the United States. In addition to that, Constellium is 1.56 times more volatile than United States Steel. It trades about -0.06 of its total potential returns per unit of risk. United States Steel is currently generating about 0.2 per unit of volatility. If you would invest 2,935 in United States Steel on September 4, 2024 and sell it today you would earn a total of 1,160 from holding United States Steel or generate 39.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellium Nv vs. United States Steel
Performance |
| Timeline |
| Constellium Nv |
| United States Steel |
Constellium and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellium and United States
The main advantage of trading using opposite Constellium and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellium position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Constellium vs. Century Aluminum | Constellium vs. Alcoa Corp | Constellium vs. China Hongqiao Group | Constellium vs. Norsk Hydro ASA |
| United States vs. Constellium Nv | United States vs. Century Aluminum | United States vs. China Hongqiao Group | United States 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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