Correlation Between Steel Dynamics and AdvisorShares
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and AdvisorShares 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 AdvisorShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and AdvisorShares, you can compare the effects of market volatilities on Steel Dynamics and AdvisorShares 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 AdvisorShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and AdvisorShares.
Diversification Opportunities for Steel Dynamics and AdvisorShares
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Steel and AdvisorShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares 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 AdvisorShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and AdvisorShares go up and down completely randomly.
Pair Corralation between Steel Dynamics and AdvisorShares
If you would invest 12,623 in Steel Dynamics on September 3, 2024 and sell it today you would earn a total of 1,904 from holding Steel Dynamics or generate 15.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Steel Dynamics vs. AdvisorShares
Performance |
| Timeline |
| Steel Dynamics |
| AdvisorShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Steel Dynamics and AdvisorShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and AdvisorShares
The main advantage of trading using opposite Steel Dynamics and AdvisorShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, AdvisorShares 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 AdvisorShares will offset losses from the drop in AdvisorShares' 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 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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