Correlation Between Global Tech and Steel Partners
Can any of the company-specific risk be diversified away by investing in both Global Tech and Steel Partners 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 Global Tech and Steel Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Tech Industries and Steel Partners Holdings, you can compare the effects of market volatilities on Global Tech and Steel Partners 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 Global Tech with a short position of Steel Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Tech and Steel Partners.
Diversification Opportunities for Global Tech and Steel Partners
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and Steel is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Global Tech Industries and Steel Partners Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Partners Holdings and Global Tech 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 Global Tech Industries are associated (or correlated) with Steel Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Partners Holdings has no effect on the direction of Global Tech i.e., Global Tech and Steel Partners go up and down completely randomly.
Pair Corralation between Global Tech and Steel Partners
Given the investment horizon of 90 days Global Tech Industries is expected to generate 9.52 times more return on investment than Steel Partners. However, Global Tech is 9.52 times more volatile than Steel Partners Holdings. It trades about 0.18 of its potential returns per unit of risk. Steel Partners Holdings is currently generating about 0.15 per unit of risk. If you would invest 2.50 in Global Tech Industries on September 1, 2024 and sell it today you would earn a total of 0.51 from holding Global Tech Industries or generate 20.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Global Tech Industries vs. Steel Partners Holdings
Performance |
| Timeline |
| Global Tech Industries |
| Steel Partners Holdings |
Global Tech and Steel Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Tech and Steel Partners
The main advantage of trading using opposite Global Tech and Steel Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Tech position performs unexpectedly, Steel Partners 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 Steel Partners will offset losses from the drop in Steel Partners' long position.| Global Tech vs. Seychelle Environmtl | Global Tech vs. Energy and Water | Global Tech vs. One World Universe | Global Tech vs. Vow ASA |
| Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Tejon Ranch Co |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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