Correlation Between Nucor Corp and Nippon Steel
Can any of the company-specific risk be diversified away by investing in both Nucor Corp and Nippon Steel 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 Nippon Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nucor Corp and Nippon Steel Corp, you can compare the effects of market volatilities on Nucor Corp and Nippon Steel 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 Nippon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nucor Corp and Nippon Steel.
Diversification Opportunities for Nucor Corp and Nippon Steel
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nucor and Nippon is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nucor Corp and Nippon Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel Corp 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 Nippon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Steel Corp has no effect on the direction of Nucor Corp i.e., Nucor Corp and Nippon Steel go up and down completely randomly.
Pair Corralation between Nucor Corp and Nippon Steel
Considering the 90-day investment horizon Nucor Corp is expected to generate 1.45 times more return on investment than Nippon Steel. However, Nucor Corp is 1.45 times more volatile than Nippon Steel Corp. It trades about 0.12 of its potential returns per unit of risk. Nippon Steel Corp is currently generating about 0.08 per unit of risk. If you would invest 14,260 in Nucor Corp on September 5, 2024 and sell it today you would earn a total of 1,238 from holding Nucor Corp or generate 8.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nucor Corp vs. Nippon Steel Corp
Performance |
| Timeline |
| Nucor Corp |
| Nippon Steel Corp |
Nucor Corp and Nippon Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nucor Corp and Nippon Steel
The main advantage of trading using opposite Nucor Corp and Nippon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nucor Corp position performs unexpectedly, Nippon Steel 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 Nippon Steel will offset losses from the drop in Nippon Steel's long position.| Nucor Corp vs. Constellium Nv | Nucor Corp vs. Century Aluminum | Nucor Corp vs. China Hongqiao Group | Nucor Corp vs. Kaiser Aluminum |
| Nippon Steel vs. Olympic Steel | Nippon Steel vs. POSCO Holdings | Nippon Steel vs. Steel Dynamics | Nippon Steel vs. Universal Stainless Alloy |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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