Correlation Between Friedman Industries and Commercial Metals
Can any of the company-specific risk be diversified away by investing in both Friedman Industries and Commercial Metals 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 Friedman Industries and Commercial Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Friedman Industries and Commercial Metals, you can compare the effects of market volatilities on Friedman Industries and Commercial Metals 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 Friedman Industries with a short position of Commercial Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Friedman Industries and Commercial Metals.
Diversification Opportunities for Friedman Industries and Commercial Metals
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Friedman and Commercial is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Friedman Industries and Commercial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Metals and Friedman Industries 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 Friedman Industries are associated (or correlated) with Commercial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Metals has no effect on the direction of Friedman Industries i.e., Friedman Industries and Commercial Metals go up and down completely randomly.
Pair Corralation between Friedman Industries and Commercial Metals
Considering the 90-day investment horizon Friedman Industries is expected to generate 1.59 times more return on investment than Commercial Metals. However, Friedman Industries is 1.59 times more volatile than Commercial Metals. It trades about 0.05 of its potential returns per unit of risk. Commercial Metals is currently generating about 0.04 per unit of risk. If you would invest 850.00 in Friedman Industries on September 2, 2024 and sell it today you would earn a total of 673.00 from holding Friedman Industries or generate 79.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Friedman Industries vs. Commercial Metals
Performance |
| Timeline |
| Friedman Industries |
| Commercial Metals |
Friedman Industries and Commercial Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Friedman Industries and Commercial Metals
The main advantage of trading using opposite Friedman Industries and Commercial Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Friedman Industries position performs unexpectedly, Commercial Metals 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 Commercial Metals will offset losses from the drop in Commercial Metals' long position.| Friedman Industries vs. Fortitude Gold Corp | Friedman Industries vs. New Gold | Friedman Industries vs. Galiano Gold | Friedman Industries vs. GoldMining |
| Commercial Metals vs. Olympic Steel | Commercial Metals vs. Steel Dynamics | Commercial Metals vs. Nucor Corp | Commercial Metals 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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