Correlation Between MDU Resources and Steel Partners
Can any of the company-specific risk be diversified away by investing in both MDU Resources 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 MDU Resources and Steel Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MDU Resources Group and Steel Partners Holdings, you can compare the effects of market volatilities on MDU Resources 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 MDU Resources with a short position of Steel Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of MDU Resources and Steel Partners.
Diversification Opportunities for MDU Resources and Steel Partners
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MDU and Steel is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding MDU Resources Group 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 MDU Resources 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 MDU Resources Group 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 MDU Resources i.e., MDU Resources and Steel Partners go up and down completely randomly.
Pair Corralation between MDU Resources and Steel Partners
Considering the 90-day investment horizon MDU Resources Group is expected to generate 3.56 times more return on investment than Steel Partners. However, MDU Resources is 3.56 times more volatile than Steel Partners Holdings. It trades about 0.07 of its potential returns per unit of risk. Steel Partners Holdings is currently generating about 0.08 per unit of risk. If you would invest 1,045 in MDU Resources Group on January 13, 2025 and sell it today you would earn a total of 605.00 from holding MDU Resources Group or generate 57.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MDU Resources Group vs. Steel Partners Holdings
Performance |
| Timeline |
| MDU Resources Group |
| Steel Partners Holdings |
MDU Resources and Steel Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MDU Resources and Steel Partners
The main advantage of trading using opposite MDU Resources and Steel Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MDU Resources 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.| MDU Resources vs. Griffon | MDU Resources vs. Brookfield Business Partners | MDU Resources vs. Matthews International | MDU Resources vs. Steel Partners Holdings |
| Steel Partners vs. Compass Diversified | Steel Partners vs. Brookfield Business Partners | Steel Partners vs. Matthews International | 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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