Correlation Between ArcelorMittal and Western Acquisition
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Western Acquisition 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 Western Acquisition 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 Western Acquisition Ventures, you can compare the effects of market volatilities on ArcelorMittal and Western Acquisition 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 Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Western Acquisition.
Diversification Opportunities for ArcelorMittal and Western Acquisition
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ArcelorMittal and Western is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Western Acquisition go up and down completely randomly.
Pair Corralation between ArcelorMittal and Western Acquisition
Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to generate 1.28 times more return on investment than Western Acquisition. However, ArcelorMittal is 1.28 times more volatile than Western Acquisition Ventures. It trades about 0.01 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.01 per unit of risk. If you would invest 2,522 in ArcelorMittal SA ADR on September 4, 2024 and sell it today you would earn a total of 2.00 from holding ArcelorMittal SA ADR or generate 0.08% 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. Western Acquisition Ventures
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| Western Acquisition |
ArcelorMittal and Western Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Western Acquisition
The main advantage of trading using opposite ArcelorMittal and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition's long position.| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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