Correlation Between ArcelorMittal and Friedman Industries
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Friedman Industries 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 Friedman Industries 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 Friedman Industries, you can compare the effects of market volatilities on ArcelorMittal and Friedman Industries 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 Friedman Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Friedman Industries.
Diversification Opportunities for ArcelorMittal and Friedman Industries
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ArcelorMittal and Friedman is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Friedman Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Friedman Industries 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 Friedman Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Friedman Industries has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Friedman Industries go up and down completely randomly.
Pair Corralation between ArcelorMittal and Friedman Industries
Allowing for the 90-day total investment horizon ArcelorMittal is expected to generate 67.04 times less return on investment than Friedman Industries. But when comparing it to its historical volatility, ArcelorMittal SA ADR is 1.94 times less risky than Friedman Industries. It trades about 0.0 of its potential returns per unit of risk. Friedman Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 988.00 in Friedman Industries on August 31, 2024 and sell it today you would earn a total of 535.00 from holding Friedman Industries or generate 54.15% 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. Friedman Industries
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| Friedman Industries |
ArcelorMittal and Friedman Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Friedman Industries
The main advantage of trading using opposite ArcelorMittal and Friedman Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Friedman Industries 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 Friedman Industries will offset losses from the drop in Friedman Industries' long position.| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
| Friedman Industries vs. ArcelorMittal SA | Friedman Industries vs. Aperam PK | Friedman Industries vs. Acerinox SA ADR | Friedman Industries vs. Algoma Steel Group |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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