Correlation Between STEEL DYNAMICS and Northern Data
Can any of the company-specific risk be diversified away by investing in both STEEL DYNAMICS and Northern Data 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 Northern Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STEEL DYNAMICS and Northern Data AG, you can compare the effects of market volatilities on STEEL DYNAMICS and Northern Data 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 Northern Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of STEEL DYNAMICS and Northern Data.
Diversification Opportunities for STEEL DYNAMICS and Northern Data
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STEEL and Northern is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding STEEL DYNAMICS and Northern Data AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Data AG 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 Northern Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Data AG has no effect on the direction of STEEL DYNAMICS i.e., STEEL DYNAMICS and Northern Data go up and down completely randomly.
Pair Corralation between STEEL DYNAMICS and Northern Data
Assuming the 90 days trading horizon STEEL DYNAMICS is expected to under-perform the Northern Data. But the stock apears to be less risky and, when comparing its historical volatility, STEEL DYNAMICS is 2.38 times less risky than Northern Data. The stock trades about -0.28 of its potential returns per unit of risk. The Northern Data AG is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 3,955 in Northern Data AG on October 11, 2024 and sell it today you would earn a total of 990.00 from holding Northern Data AG or generate 25.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STEEL DYNAMICS vs. Northern Data AG
Performance |
| Timeline |
| STEEL DYNAMICS |
| Northern Data AG |
STEEL DYNAMICS and Northern Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STEEL DYNAMICS and Northern Data
The main advantage of trading using opposite STEEL DYNAMICS and Northern Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STEEL DYNAMICS position performs unexpectedly, Northern Data 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 Northern Data will offset losses from the drop in Northern Data's long position.| STEEL DYNAMICS vs. China Resources Beer | STEEL DYNAMICS vs. Titan Machinery | STEEL DYNAMICS vs. FARM 51 GROUP | STEEL DYNAMICS vs. Federal Agricultural Mortgage |
| Northern Data vs. RELIANCE STEEL AL | Northern Data vs. NEW MILLENNIUM IRON | Northern Data vs. VELA TECHNOLPLC LS 0001 | Northern Data 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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