Correlation Between Steel Dynamics and Associated British
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Associated British 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 Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Associated British Foods, you can compare the effects of market volatilities on Steel Dynamics and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Associated British.
Diversification Opportunities for Steel Dynamics and Associated British
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Steel and Associated is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Associated British go up and down completely randomly.
Pair Corralation between Steel Dynamics and Associated British
Given the investment horizon of 90 days Steel Dynamics is expected to generate 2.81 times more return on investment than Associated British. However, Steel Dynamics is 2.81 times more volatile than Associated British Foods. It trades about 0.13 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.08 per unit of risk. If you would invest 13,358 in Steel Dynamics on September 4, 2024 and sell it today you would earn a total of 1,123 from holding Steel Dynamics or generate 8.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Steel Dynamics vs. Associated British Foods
Performance |
| Timeline |
| Steel Dynamics |
| Associated British Foods |
Steel Dynamics and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Associated British
The main advantage of trading using opposite Steel Dynamics and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British'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 |
| Associated British vs. Cogent Communications Holdings | Associated British vs. Shenandoah Telecommunications | Associated British vs. Charter Communications | Associated British vs. Zoom Video Communications |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |