Correlation Between Western Asset and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Investment and Algoma Steel Group, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Algoma Steel.
Diversification Opportunities for Western Asset and Algoma Steel
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Algoma is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment 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 Western Asset 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 Western Asset Investment 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 Western Asset i.e., Western Asset and Algoma Steel go up and down completely randomly.
Pair Corralation between Western Asset and Algoma Steel
Considering the 90-day investment horizon Western Asset is expected to generate 21.79 times less return on investment than Algoma Steel. But when comparing it to its historical volatility, Western Asset Investment is 5.2 times less risky than Algoma Steel. It trades about 0.03 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 783.00 in Algoma Steel Group on August 26, 2024 and sell it today you would earn a total of 343.00 from holding Algoma Steel Group or generate 43.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Investment vs. Algoma Steel Group
Performance |
| Timeline |
| Western Asset Investment |
| Algoma Steel Group |
Western Asset and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Algoma Steel
The main advantage of trading using opposite Western Asset and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. PowerUp Acquisition Corp | Western Asset vs. Aurora Innovation | Western Asset vs. HUMANA INC | Western Asset vs. Aquagold International |
| Algoma Steel vs. Labrador Gold Corp | Algoma Steel vs. Aurion Resources | Algoma Steel vs. Puma Exploration | Algoma Steel vs. Golden Star Resource |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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