Correlation Between Reliance Steel and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both Reliance Steel and Sterling Construction 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 Sterling Construction 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 Sterling Construction, you can compare the effects of market volatilities on Reliance Steel and Sterling Construction 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 Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Steel and Sterling Construction.
Diversification Opportunities for Reliance Steel and Sterling Construction
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Reliance and Sterling is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction 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 Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of Reliance Steel i.e., Reliance Steel and Sterling Construction go up and down completely randomly.
Pair Corralation between Reliance Steel and Sterling Construction
Assuming the 90 days horizon Reliance Steel is expected to generate 3.84 times less return on investment than Sterling Construction. But when comparing it to its historical volatility, Reliance Steel Aluminum is 1.74 times less risky than Sterling Construction. It trades about 0.06 of its potential returns per unit of risk. Sterling Construction is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,040 in Sterling Construction on September 12, 2024 and sell it today you would earn a total of 14,315 from holding Sterling Construction or generate 470.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reliance Steel Aluminum vs. Sterling Construction
Performance |
| Timeline |
| Reliance Steel Aluminum |
| Sterling Construction |
Reliance Steel and Sterling Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Steel and Sterling Construction
The main advantage of trading using opposite Reliance Steel and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Steel position performs unexpectedly, Sterling Construction 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 Sterling Construction will offset losses from the drop in Sterling Construction's long position.| Reliance Steel vs. Tower One Wireless | Reliance Steel vs. T MOBILE US | Reliance Steel vs. Entravision Communications | Reliance Steel vs. Luckin Coffee |
| Sterling Construction vs. Superior Plus Corp | Sterling Construction vs. SIVERS SEMICONDUCTORS AB | Sterling Construction vs. Norsk Hydro ASA | Sterling Construction vs. Reliance Steel Aluminum |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |