Correlation Between Nucor Corp and US Gold
Can any of the company-specific risk be diversified away by investing in both Nucor Corp and US Gold 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 US Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nucor Corp and US Gold Corp, you can compare the effects of market volatilities on Nucor Corp and US Gold 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 US Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nucor Corp and US Gold.
Diversification Opportunities for Nucor Corp and US Gold
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nucor and USAU is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nucor Corp and US Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Gold 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 US Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Gold Corp has no effect on the direction of Nucor Corp i.e., Nucor Corp and US Gold go up and down completely randomly.
Pair Corralation between Nucor Corp and US Gold
Considering the 90-day investment horizon Nucor Corp is expected to under-perform the US Gold. But the stock apears to be less risky and, when comparing its historical volatility, Nucor Corp is 1.35 times less risky than US Gold. The stock trades about -0.1 of its potential returns per unit of risk. The US Gold Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 561.00 in US Gold Corp on September 19, 2024 and sell it today you would earn a total of 109.00 from holding US Gold Corp or generate 19.43% 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. US Gold Corp
Performance |
| Timeline |
| Nucor Corp |
| US Gold Corp |
Nucor Corp and US Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nucor Corp and US Gold
The main advantage of trading using opposite Nucor Corp and US Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nucor Corp position performs unexpectedly, US Gold 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 US Gold will offset losses from the drop in US Gold's long position.The idea behind Nucor Corp and US Gold Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| US Gold vs. Olympic Steel | US Gold vs. Steel Dynamics | US Gold vs. Commercial Metals | US Gold vs. Nucor Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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