Correlation Between Nucor Corp and Voestalpine
Can any of the company-specific risk be diversified away by investing in both Nucor Corp and Voestalpine 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 Voestalpine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nucor Corp and Voestalpine AG, you can compare the effects of market volatilities on Nucor Corp and Voestalpine 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 Voestalpine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nucor Corp and Voestalpine.
Diversification Opportunities for Nucor Corp and Voestalpine
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nucor and Voestalpine is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nucor Corp and Voestalpine AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voestalpine AG 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 Voestalpine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voestalpine AG has no effect on the direction of Nucor Corp i.e., Nucor Corp and Voestalpine go up and down completely randomly.
Pair Corralation between Nucor Corp and Voestalpine
Considering the 90-day investment horizon Nucor Corp is expected to generate 0.99 times more return on investment than Voestalpine. However, Nucor Corp is 1.01 times less risky than Voestalpine. It trades about 0.0 of its potential returns per unit of risk. Voestalpine AG is currently generating about -0.05 per unit of risk. If you would invest 16,113 in Nucor Corp on September 2, 2024 and sell it today you would lose (644.00) from holding Nucor Corp or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.02% |
| Values | Daily Returns |
Nucor Corp vs. Voestalpine AG
Performance |
| Timeline |
| Nucor Corp |
| Voestalpine AG |
Nucor Corp and Voestalpine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nucor Corp and Voestalpine
The main advantage of trading using opposite Nucor Corp and Voestalpine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nucor Corp position performs unexpectedly, Voestalpine 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 Voestalpine will offset losses from the drop in Voestalpine'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 |
| Voestalpine vs. Steel Dynamics | Voestalpine vs. Huadi International Group | Voestalpine vs. Nucor Corp | Voestalpine vs. Cleveland Cliffs |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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