Correlation Between Steel Dynamics and FIREWEED METALS
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and FIREWEED METALS 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 FIREWEED METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and FIREWEED METALS P, you can compare the effects of market volatilities on Steel Dynamics and FIREWEED METALS 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 FIREWEED METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and FIREWEED METALS.
Diversification Opportunities for Steel Dynamics and FIREWEED METALS
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Steel and FIREWEED is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and FIREWEED METALS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIREWEED METALS P 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 FIREWEED METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIREWEED METALS P has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and FIREWEED METALS go up and down completely randomly.
Pair Corralation between Steel Dynamics and FIREWEED METALS
Assuming the 90 days horizon Steel Dynamics is expected to generate 1.07 times less return on investment than FIREWEED METALS. But when comparing it to its historical volatility, Steel Dynamics is 1.19 times less risky than FIREWEED METALS. It trades about 0.12 of its potential returns per unit of risk. FIREWEED METALS P is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 77.00 in FIREWEED METALS P on September 5, 2024 and sell it today you would earn a total of 19.00 from holding FIREWEED METALS P or generate 24.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.85% |
Values | Daily Returns |
Steel Dynamics vs. FIREWEED METALS P
Performance |
Timeline |
Steel Dynamics |
FIREWEED METALS P |
Steel Dynamics and FIREWEED METALS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Steel Dynamics and FIREWEED METALS
The main advantage of trading using opposite Steel Dynamics and FIREWEED METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, FIREWEED METALS 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 FIREWEED METALS will offset losses from the drop in FIREWEED METALS's long position.Steel Dynamics vs. Perma Fix Environmental Services | Steel Dynamics vs. MITSUBISHI STEEL MFG | Steel Dynamics vs. MEDICAL FACILITIES NEW | Steel Dynamics vs. ONWARD MEDICAL BV |
FIREWEED METALS vs. BlueScope Steel Limited | FIREWEED METALS vs. JD SPORTS FASH | FIREWEED METALS vs. Steel Dynamics | FIREWEED METALS vs. NIPPON STEEL SPADR |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |