Correlation Between Stepan and NUCOR
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By analyzing existing cross correlation between Stepan Company and NUCOR P 395, you can compare the effects of market volatilities on Stepan and NUCOR 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 Stepan with a short position of NUCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and NUCOR.
Diversification Opportunities for Stepan and NUCOR
Good diversification
The 3 months correlation between Stepan and NUCOR is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and NUCOR P 395 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NUCOR P 5 and Stepan 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 Stepan Company are associated (or correlated) with NUCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NUCOR P 5 has no effect on the direction of Stepan i.e., Stepan and NUCOR go up and down completely randomly.
Pair Corralation between Stepan and NUCOR
Considering the 90-day investment horizon Stepan Company is expected to under-perform the NUCOR. In addition to that, Stepan is 5.09 times more volatile than NUCOR P 395. It trades about -0.02 of its total potential returns per unit of risk. NUCOR P 395 is currently generating about 0.01 per unit of volatility. If you would invest 9,624 in NUCOR P 395 on September 3, 2024 and sell it today you would earn a total of 57.00 from holding NUCOR P 395 or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.98% |
| Values | Daily Returns |
Stepan Company vs. NUCOR P 395
Performance |
| Timeline |
| Stepan Company |
| NUCOR P 5 |
Stepan and NUCOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and NUCOR
The main advantage of trading using opposite Stepan and NUCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, NUCOR 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 NUCOR will offset losses from the drop in NUCOR's long position.The idea behind Stepan Company and NUCOR P 395 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| NUCOR vs. Merit Medical Systems | NUCOR vs. CF Industries Holdings | NUCOR vs. The Mosaic | NUCOR vs. Sensient Technologies |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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