Correlation Between ArcelorMittal and AdvanSix
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and AdvanSix 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 AdvanSix 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 AdvanSix, you can compare the effects of market volatilities on ArcelorMittal and AdvanSix 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 AdvanSix. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and AdvanSix.
Diversification Opportunities for ArcelorMittal and AdvanSix
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ArcelorMittal and AdvanSix is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix 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 AdvanSix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvanSix has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and AdvanSix go up and down completely randomly.
Pair Corralation between ArcelorMittal and AdvanSix
Allowing for the 90-day total investment horizon ArcelorMittal is expected to generate 1.25 times less return on investment than AdvanSix. But when comparing it to its historical volatility, ArcelorMittal SA ADR is 1.48 times less risky than AdvanSix. It trades about 0.29 of its potential returns per unit of risk. AdvanSix is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,765 in AdvanSix on November 2, 2024 and sell it today you would earn a total of 354.00 from holding AdvanSix or generate 12.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ArcelorMittal SA ADR vs. AdvanSix
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| AdvanSix |
ArcelorMittal and AdvanSix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and AdvanSix
The main advantage of trading using opposite ArcelorMittal and AdvanSix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, AdvanSix 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 AdvanSix will offset losses from the drop in AdvanSix's long position.| ArcelorMittal vs. Agnico Eagle Mines | ArcelorMittal vs. Pan American Silver | ArcelorMittal vs. Kinross Gold | ArcelorMittal vs. Newmont Goldcorp Corp |
| AdvanSix vs. Methanex | AdvanSix vs. Lsb Industries | AdvanSix vs. Green Plains Renewable | AdvanSix vs. Tronox Holdings PLC |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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