Correlation Between STEEL DYNAMICS and Service Properties
Can any of the company-specific risk be diversified away by investing in both STEEL DYNAMICS and Service Properties 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 Service Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STEEL DYNAMICS and Service Properties Trust, you can compare the effects of market volatilities on STEEL DYNAMICS and Service Properties 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 Service Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of STEEL DYNAMICS and Service Properties.
Diversification Opportunities for STEEL DYNAMICS and Service Properties
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between STEEL and Service is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding STEEL DYNAMICS and Service Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service Properties Trust 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 Service Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service Properties Trust has no effect on the direction of STEEL DYNAMICS i.e., STEEL DYNAMICS and Service Properties go up and down completely randomly.
Pair Corralation between STEEL DYNAMICS and Service Properties
Assuming the 90 days trading horizon STEEL DYNAMICS is expected to generate 1.09 times less return on investment than Service Properties. But when comparing it to its historical volatility, STEEL DYNAMICS is 1.1 times less risky than Service Properties. It trades about 0.25 of its potential returns per unit of risk. Service Properties Trust is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 242.00 in Service Properties Trust on November 4, 2024 and sell it today you would earn a total of 32.00 from holding Service Properties Trust or generate 13.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STEEL DYNAMICS vs. Service Properties Trust
Performance |
| Timeline |
| STEEL DYNAMICS |
| Service Properties Trust |
STEEL DYNAMICS and Service Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STEEL DYNAMICS and Service Properties
The main advantage of trading using opposite STEEL DYNAMICS and Service Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STEEL DYNAMICS position performs unexpectedly, Service Properties 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 Service Properties will offset losses from the drop in Service Properties' 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 |
| Service Properties vs. Cass Information Systems | Service Properties vs. MAGNUM MINING EXP | Service Properties vs. STGEORGE MINING LTD | Service Properties vs. MCEWEN MINING INC |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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