Correlation Between RELIANCE STEEL and Fiskars Oyj
Can any of the company-specific risk be diversified away by investing in both RELIANCE STEEL and Fiskars Oyj 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 Fiskars Oyj 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 Fiskars Oyj Abp, you can compare the effects of market volatilities on RELIANCE STEEL and Fiskars Oyj 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 Fiskars Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of RELIANCE STEEL and Fiskars Oyj.
Diversification Opportunities for RELIANCE STEEL and Fiskars Oyj
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between RELIANCE and Fiskars is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding RELIANCE STEEL AL and Fiskars Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiskars Oyj Abp 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 Fiskars Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiskars Oyj Abp has no effect on the direction of RELIANCE STEEL i.e., RELIANCE STEEL and Fiskars Oyj go up and down completely randomly.
Pair Corralation between RELIANCE STEEL and Fiskars Oyj
Assuming the 90 days trading horizon RELIANCE STEEL AL is expected to generate 0.52 times more return on investment than Fiskars Oyj. However, RELIANCE STEEL AL is 1.93 times less risky than Fiskars Oyj. It trades about 0.5 of its potential returns per unit of risk. Fiskars Oyj Abp is currently generating about 0.04 per unit of risk. If you would invest 25,790 in RELIANCE STEEL AL on October 23, 2024 and sell it today you would earn a total of 1,880 from holding RELIANCE STEEL AL or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.12% |
| Values | Daily Returns |
RELIANCE STEEL AL vs. Fiskars Oyj Abp
Performance |
| Timeline |
| RELIANCE STEEL AL |
| Fiskars Oyj Abp |
RELIANCE STEEL and Fiskars Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RELIANCE STEEL and Fiskars Oyj
The main advantage of trading using opposite RELIANCE STEEL and Fiskars Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RELIANCE STEEL position performs unexpectedly, Fiskars Oyj 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 Fiskars Oyj will offset losses from the drop in Fiskars Oyj's long position.| RELIANCE STEEL vs. Lifeway Foods | RELIANCE STEEL vs. Unity Software | RELIANCE STEEL vs. Austevoll Seafood ASA | RELIANCE STEEL vs. MTY Food Group |
| Fiskars Oyj vs. Meiko Electronics Co | Fiskars Oyj vs. Altair Engineering | Fiskars Oyj vs. Nucletron Electronic Aktiengesellschaft | Fiskars Oyj vs. Air New Zealand |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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