Correlation Between Ferrexpo PLC and United States
Can any of the company-specific risk be diversified away by investing in both Ferrexpo PLC 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 Ferrexpo PLC and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrexpo PLC and United States Steel, you can compare the effects of market volatilities on Ferrexpo PLC 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 Ferrexpo PLC with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrexpo PLC and United States.
Diversification Opportunities for Ferrexpo PLC and United States
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ferrexpo and United is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ferrexpo PLC 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 Ferrexpo PLC 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 Ferrexpo PLC 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 Ferrexpo PLC i.e., Ferrexpo PLC and United States go up and down completely randomly.
Pair Corralation between Ferrexpo PLC and United States
Assuming the 90 days horizon Ferrexpo PLC is expected to under-perform the United States. In addition to that, Ferrexpo PLC is 1.39 times more volatile than United States Steel. It trades about -0.01 of its total potential returns per unit of risk. United States Steel is currently generating about 0.05 per unit of volatility. If you would invest 2,549 in United States Steel on September 2, 2024 and sell it today you would earn a total of 1,528 from holding United States Steel or generate 59.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ferrexpo PLC vs. United States Steel
Performance |
| Timeline |
| Ferrexpo PLC |
| United States Steel |
Ferrexpo PLC and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrexpo PLC and United States
The main advantage of trading using opposite Ferrexpo PLC and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrexpo PLC 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.| Ferrexpo PLC vs. ArcelorMittal SA | Ferrexpo PLC vs. Acerinox SA ADR | Ferrexpo PLC vs. Aperam PK | Ferrexpo PLC vs. Algoma Steel Group |
| United States vs. Fortitude Gold Corp | United States vs. New Gold | United States vs. Galiano Gold | United States vs. GoldMining |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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