Correlation Between Steel Dynamics and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Jacquet Metal 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 Steel Dynamics and Jacquet Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Jacquet Metal Service, you can compare the effects of market volatilities on Steel Dynamics and Jacquet Metal 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 Steel Dynamics with a short position of Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Jacquet Metal.
Diversification Opportunities for Steel Dynamics and Jacquet Metal
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Steel and Jacquet is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service and Steel Dynamics 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 Steel Dynamics are associated (or correlated) with Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Jacquet Metal go up and down completely randomly.
Pair Corralation between Steel Dynamics and Jacquet Metal
Assuming the 90 days horizon Steel Dynamics is expected to generate 0.97 times more return on investment than Jacquet Metal. However, Steel Dynamics is 1.03 times less risky than Jacquet Metal. It trades about 0.3 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about -0.38 per unit of risk. If you would invest 10,959 in Steel Dynamics on October 23, 2024 and sell it today you would earn a total of 1,125 from holding Steel Dynamics or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. Jacquet Metal Service
Performance |
| Timeline |
| Steel Dynamics |
| Jacquet Metal Service |
Steel Dynamics and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Jacquet Metal
The main advantage of trading using opposite Steel Dynamics and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.| Steel Dynamics vs. DATATEC LTD 2 | Steel Dynamics vs. ScanSource | Steel Dynamics vs. CanSino Biologics | Steel Dynamics vs. Austevoll Seafood ASA |
| Jacquet Metal vs. Nucor | Jacquet Metal vs. ArcelorMittal SA | Jacquet Metal vs. ArcelorMittal | Jacquet Metal vs. Steel Dynamics |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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