Correlation Between Steel Dynamics and Deutsche Brse
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Deutsche Brse 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 Deutsche Brse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Deutsche Brse AG, you can compare the effects of market volatilities on Steel Dynamics and Deutsche Brse 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 Deutsche Brse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Deutsche Brse.
Diversification Opportunities for Steel Dynamics and Deutsche Brse
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Steel and Deutsche is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Deutsche Brse AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Brse AG 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 Deutsche Brse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Brse AG has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Deutsche Brse go up and down completely randomly.
Pair Corralation between Steel Dynamics and Deutsche Brse
Given the investment horizon of 90 days Steel Dynamics is expected to under-perform the Deutsche Brse. In addition to that, Steel Dynamics is 1.42 times more volatile than Deutsche Brse AG. It trades about -0.26 of its total potential returns per unit of risk. Deutsche Brse AG is currently generating about 0.25 per unit of volatility. If you would invest 20,960 in Deutsche Brse AG on September 13, 2024 and sell it today you would earn a total of 1,110 from holding Deutsche Brse AG or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Steel Dynamics vs. Deutsche Brse AG
Performance |
| Timeline |
| Steel Dynamics |
| Deutsche Brse AG |
Steel Dynamics and Deutsche Brse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Deutsche Brse
The main advantage of trading using opposite Steel Dynamics and Deutsche Brse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Deutsche Brse 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 Deutsche Brse will offset losses from the drop in Deutsche Brse'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 |
| Deutsche Brse vs. CME Group | Deutsche Brse vs. Intercontinental Exchange | Deutsche Brse vs. Hong Kong Exchanges | Deutsche Brse vs. London Stock Exchange |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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