Correlation Between Steel Dynamics and Citizens Bancorp
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Citizens Bancorp 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 Citizens Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Citizens Bancorp Investment, you can compare the effects of market volatilities on Steel Dynamics and Citizens Bancorp 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 Citizens Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Citizens Bancorp.
Diversification Opportunities for Steel Dynamics and Citizens Bancorp
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Steel and Citizens is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Citizens Bancorp Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancorp Inv 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 Citizens Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Bancorp Inv has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Citizens Bancorp go up and down completely randomly.
Pair Corralation between Steel Dynamics and Citizens Bancorp
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.31 times more return on investment than Citizens Bancorp. However, Steel Dynamics is 1.31 times more volatile than Citizens Bancorp Investment. It trades about 0.06 of its potential returns per unit of risk. Citizens Bancorp Investment is currently generating about -0.05 per unit of risk. If you would invest 9,818 in Steel Dynamics on August 31, 2024 and sell it today you would earn a total of 4,709 from holding Steel Dynamics or generate 47.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Steel Dynamics vs. Citizens Bancorp Investment
Performance |
| Timeline |
| Steel Dynamics |
| Citizens Bancorp Inv |
Steel Dynamics and Citizens Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Citizens Bancorp
The main advantage of trading using opposite Steel Dynamics and Citizens Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Citizens Bancorp 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 Citizens Bancorp will offset losses from the drop in Citizens Bancorp'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 |
| Citizens Bancorp vs. Greenville Federal Financial | Citizens Bancorp vs. First Ottawa Bancshares | Citizens Bancorp vs. Coastal Carolina Bancshares | Citizens Bancorp vs. First Bankers Trustshares |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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