Correlation Between Steel Dynamics and Eiffage SA
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Eiffage SA 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 Eiffage SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Eiffage SA ADR, you can compare the effects of market volatilities on Steel Dynamics and Eiffage SA 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 Eiffage SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Eiffage SA.
Diversification Opportunities for Steel Dynamics and Eiffage SA
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Steel and Eiffage is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Eiffage SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eiffage SA ADR 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 Eiffage SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eiffage SA ADR has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Eiffage SA go up and down completely randomly.
Pair Corralation between Steel Dynamics and Eiffage SA
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.1 times more return on investment than Eiffage SA. However, Steel Dynamics is 1.1 times more volatile than Eiffage SA ADR. It trades about 0.05 of its potential returns per unit of risk. Eiffage SA ADR is currently generating about -0.01 per unit of risk. If you would invest 9,878 in Steel Dynamics on September 12, 2024 and sell it today you would earn a total of 3,651 from holding Steel Dynamics or generate 36.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.66% |
| Values | Daily Returns |
Steel Dynamics vs. Eiffage SA ADR
Performance |
| Timeline |
| Steel Dynamics |
| Eiffage SA ADR |
Steel Dynamics and Eiffage SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Eiffage SA
The main advantage of trading using opposite Steel Dynamics and Eiffage SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Eiffage SA 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 Eiffage SA will offset losses from the drop in Eiffage SA'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 |
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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 Stocks Directory module to find actively traded stocks across global markets.
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