Correlation Between Basic Materials and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Basic Materials and ArcelorMittal 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 Basic Materials and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and ArcelorMittal SA, you can compare the effects of market volatilities on Basic Materials and ArcelorMittal 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 Basic Materials with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and ArcelorMittal.
Diversification Opportunities for Basic Materials and ArcelorMittal
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Basic and ArcelorMittal is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials and ArcelorMittal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA and Basic Materials 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 Basic Materials are associated (or correlated) with ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA has no effect on the direction of Basic Materials i.e., Basic Materials and ArcelorMittal go up and down completely randomly.
Pair Corralation between Basic Materials and ArcelorMittal
Assuming the 90 days trading horizon Basic Materials is expected to under-perform the ArcelorMittal. But the index apears to be less risky and, when comparing its historical volatility, Basic Materials is 1.64 times less risky than ArcelorMittal. The index trades about 0.0 of its potential returns per unit of risk. The ArcelorMittal SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,417 in ArcelorMittal SA on August 23, 2024 and sell it today you would earn a total of 905.00 from holding ArcelorMittal SA or generate 14.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.48% |
| Values | Daily Returns |
Basic Materials vs. ArcelorMittal SA
Performance |
| Timeline |
Basic Materials and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
ArcelorMittal SA
Pair trading matchups for ArcelorMittal
Pair Trading with Basic Materials and ArcelorMittal
The main advantage of trading using opposite Basic Materials and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.| Basic Materials vs. TAL Education Group | Basic Materials vs. salesforce inc | Basic Materials vs. Apartment Investment and | Basic Materials vs. Cognizant Technology Solutions |
| ArcelorMittal vs. United States Steel | ArcelorMittal vs. Companhia Siderrgica Nacional | ArcelorMittal vs. Metalurgica Gerdau SA | ArcelorMittal vs. Metalurgica Gerdau SA |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |