Correlation Between Steel Dynamics and Banco Del
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Banco Del 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 Banco Del into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Banco del Bajo, you can compare the effects of market volatilities on Steel Dynamics and Banco Del 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 Banco Del. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Banco Del.
Diversification Opportunities for Steel Dynamics and Banco Del
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Steel and Banco is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Banco del Bajo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco del Bajo 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 Banco Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco del Bajo has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Banco Del go up and down completely randomly.
Pair Corralation between Steel Dynamics and Banco Del
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.35 times more return on investment than Banco Del. However, Steel Dynamics is 1.35 times more volatile than Banco del Bajo. It trades about 0.16 of its potential returns per unit of risk. Banco del Bajo is currently generating about -0.21 per unit of risk. If you would invest 13,050 in Steel Dynamics on September 1, 2024 and sell it today you would earn a total of 1,477 from holding Steel Dynamics or generate 11.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 33.33% |
| Values | Daily Returns |
Steel Dynamics vs. Banco del Bajo
Performance |
| Timeline |
| Steel Dynamics |
| Banco del Bajo |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Steel Dynamics and Banco Del Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Banco Del
The main advantage of trading using opposite Steel Dynamics and Banco Del positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Banco Del 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 Banco Del will offset losses from the drop in Banco Del'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 |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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