Correlation Between Steel Partners and MDU Resources
Can any of the company-specific risk be diversified away by investing in both Steel Partners and MDU Resources 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 Partners and MDU Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Partners Holdings and MDU Resources Group, you can compare the effects of market volatilities on Steel Partners and MDU Resources 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 Partners with a short position of MDU Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Partners and MDU Resources.
Diversification Opportunities for Steel Partners and MDU Resources
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Steel and MDU is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Steel Partners Holdings and MDU Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDU Resources Group and Steel Partners 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 Partners Holdings are associated (or correlated) with MDU Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDU Resources Group has no effect on the direction of Steel Partners i.e., Steel Partners and MDU Resources go up and down completely randomly.
Pair Corralation between Steel Partners and MDU Resources
Given the investment horizon of 90 days Steel Partners is expected to generate 10.08 times less return on investment than MDU Resources. In addition to that, Steel Partners is 1.43 times more volatile than MDU Resources Group. It trades about 0.01 of its total potential returns per unit of risk. MDU Resources Group is currently generating about 0.1 per unit of volatility. If you would invest 1,061 in MDU Resources Group on August 24, 2024 and sell it today you would earn a total of 933.00 from holding MDU Resources Group or generate 87.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Partners Holdings vs. MDU Resources Group
Performance |
| Timeline |
| Steel Partners Holdings |
| MDU Resources Group |
Steel Partners and MDU Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Partners and MDU Resources
The main advantage of trading using opposite Steel Partners and MDU Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Partners position performs unexpectedly, MDU Resources 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 MDU Resources will offset losses from the drop in MDU Resources' long position.| Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Tejon Ranch Co |
| MDU Resources vs. Griffon | MDU Resources vs. Brookfield Business Partners | MDU Resources vs. Matthews International | MDU Resources vs. Steel Partners Holdings |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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