Correlation Between ArcelorMittal and Mesabi Trust
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Mesabi Trust 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 Mesabi Trust 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 Mesabi Trust, you can compare the effects of market volatilities on ArcelorMittal and Mesabi Trust 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 Mesabi Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Mesabi Trust.
Diversification Opportunities for ArcelorMittal and Mesabi Trust
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ArcelorMittal and Mesabi is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Mesabi Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesabi Trust 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 Mesabi Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesabi Trust has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Mesabi Trust go up and down completely randomly.
Pair Corralation between ArcelorMittal and Mesabi Trust
Allowing for the 90-day total investment horizon ArcelorMittal is expected to generate 22.43 times less return on investment than Mesabi Trust. But when comparing it to its historical volatility, ArcelorMittal SA ADR is 1.43 times less risky than Mesabi Trust. It trades about 0.0 of its potential returns per unit of risk. Mesabi Trust is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,665 in Mesabi Trust on August 30, 2024 and sell it today you would earn a total of 1,088 from holding Mesabi Trust or generate 65.35% 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. Mesabi Trust
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| Mesabi Trust |
ArcelorMittal and Mesabi Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Mesabi Trust
The main advantage of trading using opposite ArcelorMittal and Mesabi Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Mesabi Trust 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 Mesabi Trust will offset losses from the drop in Mesabi Trust's long position.| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
| Mesabi Trust vs. Franco Nevada | Mesabi Trust vs. Osisko Gold Ro | Mesabi Trust vs. Sandstorm Gold Ltd | Mesabi Trust vs. Royal Gold |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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