Correlation Between STEEL DYNAMICS and ELL ENVIRONHLDGS
Can any of the company-specific risk be diversified away by investing in both STEEL DYNAMICS and ELL ENVIRONHLDGS 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 ELL ENVIRONHLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STEEL DYNAMICS and ELL ENVIRONHLDGS HD 0001, you can compare the effects of market volatilities on STEEL DYNAMICS and ELL ENVIRONHLDGS 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 ELL ENVIRONHLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of STEEL DYNAMICS and ELL ENVIRONHLDGS.
Diversification Opportunities for STEEL DYNAMICS and ELL ENVIRONHLDGS
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STEEL and ELL is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding STEEL DYNAMICS and ELL ENVIRONHLDGS HD 0001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELL ENVIRONHLDGS 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 ELL ENVIRONHLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELL ENVIRONHLDGS has no effect on the direction of STEEL DYNAMICS i.e., STEEL DYNAMICS and ELL ENVIRONHLDGS go up and down completely randomly.
Pair Corralation between STEEL DYNAMICS and ELL ENVIRONHLDGS
Assuming the 90 days trading horizon STEEL DYNAMICS is expected to generate 1.1 times more return on investment than ELL ENVIRONHLDGS. However, STEEL DYNAMICS is 1.1 times more volatile than ELL ENVIRONHLDGS HD 0001. It trades about 0.25 of its potential returns per unit of risk. ELL ENVIRONHLDGS HD 0001 is currently generating about -0.24 per unit of risk. If you would invest 10,964 in STEEL DYNAMICS on November 4, 2024 and sell it today you would earn a total of 1,326 from holding STEEL DYNAMICS or generate 12.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
STEEL DYNAMICS vs. ELL ENVIRONHLDGS HD 0001
Performance |
| Timeline |
| STEEL DYNAMICS |
| ELL ENVIRONHLDGS |
STEEL DYNAMICS and ELL ENVIRONHLDGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STEEL DYNAMICS and ELL ENVIRONHLDGS
The main advantage of trading using opposite STEEL DYNAMICS and ELL ENVIRONHLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STEEL DYNAMICS position performs unexpectedly, ELL ENVIRONHLDGS 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 ELL ENVIRONHLDGS will offset losses from the drop in ELL ENVIRONHLDGS's long position.| STEEL DYNAMICS vs. East Africa Metals | STEEL DYNAMICS vs. DICKS Sporting Goods | STEEL DYNAMICS vs. ANTA SPORTS PRODUCT | STEEL DYNAMICS vs. JD SPORTS FASH |
| ELL ENVIRONHLDGS vs. Waste Management | ELL ENVIRONHLDGS vs. Republic Services | ELL ENVIRONHLDGS vs. Waste Connections | ELL ENVIRONHLDGS vs. Veolia Environnement SA |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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