Correlation Between Steel Dynamics and SIRIUS XM
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and SIRIUS XM 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 SIRIUS XM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and SIRIUS XM RADIO, you can compare the effects of market volatilities on Steel Dynamics and SIRIUS XM 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 SIRIUS XM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and SIRIUS XM.
Diversification Opportunities for Steel Dynamics and SIRIUS XM
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Steel and SIRIUS is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and SIRIUS XM RADIO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIRIUS XM RADIO 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 SIRIUS XM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIRIUS XM RADIO has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and SIRIUS XM go up and down completely randomly.
Pair Corralation between Steel Dynamics and SIRIUS XM
Assuming the 90 days horizon Steel Dynamics is expected to generate 1.15 times more return on investment than SIRIUS XM. However, Steel Dynamics is 1.15 times more volatile than SIRIUS XM RADIO. It trades about 0.17 of its potential returns per unit of risk. SIRIUS XM RADIO is currently generating about 0.05 per unit of risk. If you would invest 12,074 in Steel Dynamics on September 1, 2024 and sell it today you would earn a total of 1,402 from holding Steel Dynamics or generate 11.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Steel Dynamics vs. SIRIUS XM RADIO
Performance |
| Timeline |
| Steel Dynamics |
| SIRIUS XM RADIO |
Steel Dynamics and SIRIUS XM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and SIRIUS XM
The main advantage of trading using opposite Steel Dynamics and SIRIUS XM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, SIRIUS XM 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 SIRIUS XM will offset losses from the drop in SIRIUS XM's long position.| Steel Dynamics vs. Aedas Homes SA | Steel Dynamics vs. MTI WIRELESS EDGE | Steel Dynamics vs. INVITATION HOMES DL | Steel Dynamics vs. LGI Homes |
| SIRIUS XM vs. SIVERS SEMICONDUCTORS AB | SIRIUS XM vs. Darden Restaurants | SIRIUS XM vs. Reliance Steel Aluminum | SIRIUS XM vs. Q2M Managementberatung AG |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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