Correlation Between Steel Dynamics and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Sterling Capital 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 Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Sterling Capital Intermediate, you can compare the effects of market volatilities on Steel Dynamics and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Sterling Capital.
Diversification Opportunities for Steel Dynamics and Sterling Capital
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Steel and Sterling is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Sterling Capital Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Int 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Int has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Sterling Capital go up and down completely randomly.
Pair Corralation between Steel Dynamics and Sterling Capital
Given the investment horizon of 90 days Steel Dynamics is expected to generate 13.92 times more return on investment than Sterling Capital. However, Steel Dynamics is 13.92 times more volatile than Sterling Capital Intermediate. It trades about 0.13 of its potential returns per unit of risk. Sterling Capital Intermediate is currently generating about 0.14 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 | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Steel Dynamics vs. Sterling Capital Intermediate
Performance |
| Timeline |
| Steel Dynamics |
| Sterling Capital Int |
Steel Dynamics and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Sterling Capital
The main advantage of trading using opposite Steel Dynamics and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital'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 |
| Sterling Capital vs. Oppenheimer Gold Special | Sterling Capital vs. Invesco Gold Special | Sterling Capital vs. Global Gold Fund | Sterling Capital vs. Gamco Global Gold |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |