Correlation Between Nucor Corp and Acerinox
Can any of the company-specific risk be diversified away by investing in both Nucor Corp and Acerinox 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 Nucor Corp and Acerinox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nucor Corp and Acerinox SA ADR, you can compare the effects of market volatilities on Nucor Corp and Acerinox 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 Nucor Corp with a short position of Acerinox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nucor Corp and Acerinox.
Diversification Opportunities for Nucor Corp and Acerinox
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nucor and Acerinox is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nucor Corp and Acerinox SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acerinox SA ADR and Nucor Corp 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 Nucor Corp are associated (or correlated) with Acerinox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acerinox SA ADR has no effect on the direction of Nucor Corp i.e., Nucor Corp and Acerinox go up and down completely randomly.
Pair Corralation between Nucor Corp and Acerinox
Considering the 90-day investment horizon Nucor Corp is expected to generate 2.71 times less return on investment than Acerinox. But when comparing it to its historical volatility, Nucor Corp is 1.72 times less risky than Acerinox. It trades about 0.02 of its potential returns per unit of risk. Acerinox SA ADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 443.00 in Acerinox SA ADR on September 3, 2024 and sell it today you would earn a total of 57.00 from holding Acerinox SA ADR or generate 12.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 87.68% |
| Values | Daily Returns |
Nucor Corp vs. Acerinox SA ADR
Performance |
| Timeline |
| Nucor Corp |
| Acerinox SA ADR |
Nucor Corp and Acerinox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nucor Corp and Acerinox
The main advantage of trading using opposite Nucor Corp and Acerinox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nucor Corp position performs unexpectedly, Acerinox 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 Acerinox will offset losses from the drop in Acerinox's long position.| Nucor Corp vs. United States Steel | Nucor Corp vs. Reliance Steel Aluminum | Nucor Corp vs. ArcelorMittal SA ADR | Nucor Corp vs. Commercial Metals |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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