Correlation Between Steel Dynamics and Ftfa-franklin Templeton
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Ftfa-franklin Templeton 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 Ftfa-franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Ftfa Franklin Templeton Growth, you can compare the effects of market volatilities on Steel Dynamics and Ftfa-franklin Templeton 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 Ftfa-franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Ftfa-franklin Templeton.
Diversification Opportunities for Steel Dynamics and Ftfa-franklin Templeton
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Steel and Ftfa-Franklin is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Ftfa Franklin Templeton Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ftfa Franklin Templeton 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 Ftfa-franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ftfa Franklin Templeton has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Ftfa-franklin Templeton go up and down completely randomly.
Pair Corralation between Steel Dynamics and Ftfa-franklin Templeton
Given the investment horizon of 90 days Steel Dynamics is expected to generate 2.97 times more return on investment than Ftfa-franklin Templeton. However, Steel Dynamics is 2.97 times more volatile than Ftfa Franklin Templeton Growth. It trades about 0.02 of its potential returns per unit of risk. Ftfa Franklin Templeton Growth is currently generating about -0.04 per unit of risk. If you would invest 10,945 in Steel Dynamics on January 7, 2025 and sell it today you would earn a total of 159.00 from holding Steel Dynamics or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.32% |
| Values | Daily Returns |
Steel Dynamics vs. Ftfa Franklin Templeton Growth
Performance |
| Timeline |
| Steel Dynamics |
| Ftfa Franklin Templeton |
Steel Dynamics and Ftfa-franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Ftfa-franklin Templeton
The main advantage of trading using opposite Steel Dynamics and Ftfa-franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Ftfa-franklin Templeton 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 Ftfa-franklin Templeton will offset losses from the drop in Ftfa-franklin Templeton'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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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