Correlation Between Steel Dynamics and Fubon NASDAQ
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Fubon NASDAQ 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 Fubon NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Fubon NASDAQ 100 2X, you can compare the effects of market volatilities on Steel Dynamics and Fubon NASDAQ 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 Fubon NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Fubon NASDAQ.
Diversification Opportunities for Steel Dynamics and Fubon NASDAQ
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and Fubon is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Fubon NASDAQ 100 2X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon NASDAQ 100 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 Fubon NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon NASDAQ 100 has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Fubon NASDAQ go up and down completely randomly.
Pair Corralation between Steel Dynamics and Fubon NASDAQ
Given the investment horizon of 90 days Steel Dynamics is expected to generate 2.06 times more return on investment than Fubon NASDAQ. However, Steel Dynamics is 2.06 times more volatile than Fubon NASDAQ 100 2X. It trades about 0.14 of its potential returns per unit of risk. Fubon NASDAQ 100 2X is currently generating about 0.2 per unit of risk. If you would invest 13,358 in Steel Dynamics on September 3, 2024 and sell it today you would earn a total of 1,169 from holding Steel Dynamics or generate 8.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Steel Dynamics vs. Fubon NASDAQ 100 2X
Performance |
| Timeline |
| Steel Dynamics |
| Fubon NASDAQ 100 |
Steel Dynamics and Fubon NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Fubon NASDAQ
The main advantage of trading using opposite Steel Dynamics and Fubon NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Fubon NASDAQ 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 Fubon NASDAQ will offset losses from the drop in Fubon NASDAQ's long position.| Steel Dynamics vs. Cleveland Cliffs | Steel Dynamics vs. United States Steel | Steel Dynamics vs. ArcelorMittal SA ADR | Steel Dynamics vs. Reliance Steel Aluminum |
| Fubon NASDAQ vs. Fubon Hang Seng | Fubon NASDAQ vs. Fubon SP Preferred | Fubon NASDAQ vs. Fubon NASDAQ 100 1X | Fubon NASDAQ vs. Fubon TWSE Corporate |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |