Correlation Between Steel Dynamics and 361 Global
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and 361 Global 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 361 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and 361 Global Longshort, you can compare the effects of market volatilities on Steel Dynamics and 361 Global 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 361 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and 361 Global.
Diversification Opportunities for Steel Dynamics and 361 Global
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Steel and 361 is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and 361 Global Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 361 Global Longshort 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 361 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 361 Global Longshort has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and 361 Global go up and down completely randomly.
Pair Corralation between Steel Dynamics and 361 Global
Given the investment horizon of 90 days Steel Dynamics is expected to generate 7.38 times more return on investment than 361 Global. However, Steel Dynamics is 7.38 times more volatile than 361 Global Longshort. It trades about 0.11 of its potential returns per unit of risk. 361 Global Longshort 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 962.00 from holding Steel Dynamics or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Steel Dynamics vs. 361 Global Longshort
Performance |
| Timeline |
| Steel Dynamics |
| 361 Global Longshort |
Steel Dynamics and 361 Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and 361 Global
The main advantage of trading using opposite Steel Dynamics and 361 Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, 361 Global 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 361 Global will offset losses from the drop in 361 Global'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 |
| 361 Global vs. 361 Global Longshort | 361 Global vs. Swan Defined Risk | 361 Global vs. Boston Partners Longshort | 361 Global vs. 361 Global Longshort |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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