Correlation Between Reliance Steel and Unum
Can any of the company-specific risk be diversified away by investing in both Reliance Steel and Unum 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 Reliance Steel and Unum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reliance Steel Aluminum and Unum Group, you can compare the effects of market volatilities on Reliance Steel and Unum 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 Reliance Steel with a short position of Unum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Steel and Unum.
Diversification Opportunities for Reliance Steel and Unum
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Reliance and Unum is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and Unum Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unum Group and Reliance Steel 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 Reliance Steel Aluminum are associated (or correlated) with Unum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unum Group has no effect on the direction of Reliance Steel i.e., Reliance Steel and Unum go up and down completely randomly.
Pair Corralation between Reliance Steel and Unum
Allowing for the 90-day total investment horizon Reliance Steel Aluminum is expected to generate 1.37 times more return on investment than Unum. However, Reliance Steel is 1.37 times more volatile than Unum Group. It trades about 0.41 of its potential returns per unit of risk. Unum Group is currently generating about 0.39 per unit of risk. If you would invest 26,926 in Reliance Steel Aluminum on November 1, 2024 and sell it today you would earn a total of 2,374 from holding Reliance Steel Aluminum or generate 8.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reliance Steel Aluminum vs. Unum Group
Performance |
| Timeline |
| Reliance Steel Aluminum |
| Unum Group |
Reliance Steel and Unum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Steel and Unum
The main advantage of trading using opposite Reliance Steel and Unum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Steel position performs unexpectedly, Unum 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 Unum will offset losses from the drop in Unum's long position.| Reliance Steel vs. Universal Stainless Alloy | Reliance Steel vs. Outokumpu Oyj ADR | Reliance Steel vs. Olympic Steel | Reliance Steel vs. POSCO Holdings |
| Unum vs. Prudential Financial | Unum vs. MetLife | Unum vs. Jackson Financial | Unum vs. Manulife Financial 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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