Correlation Between Equity Metals and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Equity Metals and Algoma 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 Equity Metals and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Metals Corp and Algoma Steel Group, you can compare the effects of market volatilities on Equity Metals and Algoma 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 Equity Metals with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Metals and Algoma Steel.
Diversification Opportunities for Equity Metals and Algoma Steel
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Equity and Algoma is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Equity Metals Corp and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group and Equity 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 Equity Metals Corp are associated (or correlated) with Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of Equity Metals i.e., Equity Metals and Algoma Steel go up and down completely randomly.
Pair Corralation between Equity Metals and Algoma Steel
Assuming the 90 days trading horizon Equity Metals Corp is expected to generate 2.84 times more return on investment than Algoma Steel. However, Equity Metals is 2.84 times more volatile than Algoma Steel Group. It trades about 0.03 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.06 per unit of risk. If you would invest 18.00 in Equity Metals Corp on September 4, 2024 and sell it today you would lose (1.00) from holding Equity Metals Corp or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Metals Corp vs. Algoma Steel Group
Performance |
| Timeline |
| Equity Metals Corp |
| Algoma Steel Group |
Equity Metals and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Metals and Algoma Steel
The main advantage of trading using opposite Equity Metals and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Metals position performs unexpectedly, Algoma 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.| Equity Metals vs. iShares Canadian HYBrid | Equity Metals vs. Altagas Cum Red | Equity Metals vs. European Residential Real | Equity Metals vs. RBC Discount Bond |
| Algoma Steel vs. Friedman Industries | Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Reliance Steel Aluminum | Algoma Steel vs. Universal Stainless Alloy |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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