Correlation Between ArcelorMittal and Contango ORE
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Contango ORE 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 Contango ORE 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 Contango ORE, you can compare the effects of market volatilities on ArcelorMittal and Contango ORE 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 Contango ORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Contango ORE.
Diversification Opportunities for ArcelorMittal and Contango ORE
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ArcelorMittal and Contango is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Contango ORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contango ORE 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 Contango ORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contango ORE has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Contango ORE go up and down completely randomly.
Pair Corralation between ArcelorMittal and Contango ORE
Allowing for the 90-day total investment horizon ArcelorMittal is expected to generate 2.83 times less return on investment than Contango ORE. But when comparing it to its historical volatility, ArcelorMittal SA ADR is 2.2 times less risky than Contango ORE. It trades about 0.02 of its potential returns per unit of risk. Contango ORE is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,807 in Contango ORE on August 25, 2024 and sell it today you would earn a total of 56.50 from holding Contango ORE or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ArcelorMittal SA ADR vs. Contango ORE
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| Contango ORE |
ArcelorMittal and Contango ORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Contango ORE
The main advantage of trading using opposite ArcelorMittal and Contango ORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Contango ORE 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 Contango ORE will offset losses from the drop in Contango ORE's long position.| ArcelorMittal vs. Cleveland Cliffs | ArcelorMittal vs. United States Steel | ArcelorMittal vs. Reliance Steel Aluminum | ArcelorMittal vs. Nucor Corp |
| Contango ORE vs. Monarch Mining | Contango ORE vs. First Guaranty Bancshares | Contango ORE vs. Glen Burnie Bancorp | Contango ORE vs. Princeton Capital |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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