Correlation Between ArcelorMittal and Sims Metal
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Sims Metal 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 Sims Metal 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 Sims Metal Management, you can compare the effects of market volatilities on ArcelorMittal and Sims Metal 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 Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Sims Metal.
Diversification Opportunities for ArcelorMittal and Sims Metal
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ArcelorMittal and Sims is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management 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 Sims Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims Metal Management has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Sims Metal go up and down completely randomly.
Pair Corralation between ArcelorMittal and Sims Metal
If you would invest 2,653 in ArcelorMittal SA ADR on September 2, 2024 and sell it today you would lose (125.00) from holding ArcelorMittal SA ADR or give up 4.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.27% |
| Values | Daily Returns |
ArcelorMittal SA ADR vs. Sims Metal Management
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| Sims Metal Management |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ArcelorMittal and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Sims Metal
The main advantage of trading using opposite ArcelorMittal and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Sims Metal 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 Sims Metal will offset losses from the drop in Sims Metal's long position.| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
| Sims Metal vs. Steel Dynamics | Sims Metal vs. Cleveland Cliffs | Sims Metal vs. United States Steel | Sims Metal vs. ArcelorMittal SA ADR |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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