Correlation Between ArcelorMittal and Arm Holdings
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Arm Holdings 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 ArcelorMittal and Arm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ArcelorMittal SA ADR and Arm Holdings plc, you can compare the effects of market volatilities on ArcelorMittal and Arm Holdings 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 ArcelorMittal with a short position of Arm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Arm Holdings.
Diversification Opportunities for ArcelorMittal and Arm Holdings
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ArcelorMittal and Arm is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Arm Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arm Holdings plc and ArcelorMittal 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 ArcelorMittal SA ADR are associated (or correlated) with Arm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arm Holdings plc has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Arm Holdings go up and down completely randomly.
Pair Corralation between ArcelorMittal and Arm Holdings
Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to generate 0.62 times more return on investment than Arm Holdings. However, ArcelorMittal SA ADR is 1.62 times less risky than Arm Holdings. It trades about 0.01 of its potential returns per unit of risk. Arm Holdings plc is currently generating about -0.01 per unit of risk. If you would invest 2,518 in ArcelorMittal SA ADR on September 3, 2024 and sell it today you would earn a total of 10.00 from holding ArcelorMittal SA ADR or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ArcelorMittal SA ADR vs. Arm Holdings plc
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| Arm Holdings plc |
ArcelorMittal and Arm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Arm Holdings
The main advantage of trading using opposite ArcelorMittal and Arm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Arm Holdings 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 Arm Holdings will offset losses from the drop in Arm Holdings' long position.| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
| Arm Holdings vs. Viemed Healthcare | Arm Holdings vs. Kontoor Brands | Arm Holdings vs. Cumberland Pharmaceuticals | Arm Holdings vs. Tencent Music Entertainment |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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