Correlation Between Nucor Corp and Companhia Siderurgica
Can any of the company-specific risk be diversified away by investing in both Nucor Corp and Companhia Siderurgica 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 Companhia Siderurgica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nucor Corp and Companhia Siderurgica Nacional, you can compare the effects of market volatilities on Nucor Corp and Companhia Siderurgica 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 Companhia Siderurgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nucor Corp and Companhia Siderurgica.
Diversification Opportunities for Nucor Corp and Companhia Siderurgica
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nucor and Companhia is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Nucor Corp and Companhia Siderurgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderurgica 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 Companhia Siderurgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderurgica has no effect on the direction of Nucor Corp i.e., Nucor Corp and Companhia Siderurgica go up and down completely randomly.
Pair Corralation between Nucor Corp and Companhia Siderurgica
Considering the 90-day investment horizon Nucor Corp is expected to generate 0.74 times more return on investment than Companhia Siderurgica. However, Nucor Corp is 1.35 times less risky than Companhia Siderurgica. It trades about 0.02 of its potential returns per unit of risk. Companhia Siderurgica Nacional is currently generating about 0.0 per unit of risk. If you would invest 14,418 in Nucor Corp on September 2, 2024 and sell it today you would earn a total of 1,051 from holding Nucor Corp or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nucor Corp vs. Companhia Siderurgica Nacional
Performance |
| Timeline |
| Nucor Corp |
| Companhia Siderurgica |
Nucor Corp and Companhia Siderurgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nucor Corp and Companhia Siderurgica
The main advantage of trading using opposite Nucor Corp and Companhia Siderurgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nucor Corp position performs unexpectedly, Companhia Siderurgica 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 Companhia Siderurgica will offset losses from the drop in Companhia Siderurgica'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 |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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