Correlation Between RELIANCE STEEL and Keysight Technologies
Can any of the company-specific risk be diversified away by investing in both RELIANCE STEEL and Keysight Technologies 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 Keysight Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RELIANCE STEEL AL and Keysight Technologies, you can compare the effects of market volatilities on RELIANCE STEEL and Keysight Technologies 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 Keysight Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of RELIANCE STEEL and Keysight Technologies.
Diversification Opportunities for RELIANCE STEEL and Keysight Technologies
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RELIANCE and Keysight is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding RELIANCE STEEL AL and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies 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 AL are associated (or correlated) with Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of RELIANCE STEEL i.e., RELIANCE STEEL and Keysight Technologies go up and down completely randomly.
Pair Corralation between RELIANCE STEEL and Keysight Technologies
Assuming the 90 days trading horizon RELIANCE STEEL AL is expected to under-perform the Keysight Technologies. But the stock apears to be less risky and, when comparing its historical volatility, RELIANCE STEEL AL is 2.19 times less risky than Keysight Technologies. The stock trades about -0.19 of its potential returns per unit of risk. The Keysight Technologies is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 15,382 in Keysight Technologies on September 12, 2024 and sell it today you would earn a total of 1,112 from holding Keysight Technologies or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RELIANCE STEEL AL vs. Keysight Technologies
Performance |
| Timeline |
| RELIANCE STEEL AL |
| Keysight Technologies |
RELIANCE STEEL and Keysight Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RELIANCE STEEL and Keysight Technologies
The main advantage of trading using opposite RELIANCE STEEL and Keysight Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RELIANCE STEEL position performs unexpectedly, Keysight Technologies 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 Keysight Technologies will offset losses from the drop in Keysight Technologies' long position.| RELIANCE STEEL vs. Apple Inc | RELIANCE STEEL vs. Apple Inc | RELIANCE STEEL vs. Apple Inc | RELIANCE STEEL vs. Apple Inc |
| Keysight Technologies vs. HEXAGON AB ADR1 | Keysight Technologies vs. Superior Plus Corp | Keysight Technologies vs. SIVERS SEMICONDUCTORS AB | Keysight Technologies vs. NorAm Drilling AS |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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