Correlation Between Nucor and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Nucor and ArcelorMittal 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 and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nucor and ArcelorMittal SA, you can compare the effects of market volatilities on Nucor and ArcelorMittal 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 with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nucor and ArcelorMittal.
Diversification Opportunities for Nucor and ArcelorMittal
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nucor and ArcelorMittal is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nucor and ArcelorMittal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA and Nucor 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 are associated (or correlated) with ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA has no effect on the direction of Nucor i.e., Nucor and ArcelorMittal go up and down completely randomly.
Pair Corralation between Nucor and ArcelorMittal
Assuming the 90 days horizon Nucor is expected to under-perform the ArcelorMittal. In addition to that, Nucor is 1.18 times more volatile than ArcelorMittal SA. It trades about -0.57 of its total potential returns per unit of risk. ArcelorMittal SA is currently generating about -0.16 per unit of volatility. If you would invest 2,373 in ArcelorMittal SA on September 26, 2024 and sell it today you would lose (161.00) from holding ArcelorMittal SA or give up 6.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nucor vs. ArcelorMittal SA
Performance |
| Timeline |
| Nucor |
| ArcelorMittal SA |
Nucor and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nucor and ArcelorMittal
The main advantage of trading using opposite Nucor and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nucor position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.| Nucor vs. PRECISION DRILLING P | Nucor vs. Ryanair Holdings plc | Nucor vs. NXP Semiconductors NV | Nucor vs. Pembina Pipeline Corp |
| ArcelorMittal vs. Nucor | ArcelorMittal vs. ArcelorMittal | ArcelorMittal vs. Steel Dynamics | ArcelorMittal vs. Nippon Steel |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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