Correlation Between Steel Dynamics and Farm Pride
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Farm Pride 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 Farm Pride into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Farm Pride Foods, you can compare the effects of market volatilities on Steel Dynamics and Farm Pride 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 Farm Pride. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Farm Pride.
Diversification Opportunities for Steel Dynamics and Farm Pride
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Steel and Farm is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Farm Pride Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farm Pride Foods 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 Farm Pride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farm Pride Foods has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Farm Pride go up and down completely randomly.
Pair Corralation between Steel Dynamics and Farm Pride
Given the investment horizon of 90 days Steel Dynamics is expected to under-perform the Farm Pride. But the stock apears to be less risky and, when comparing its historical volatility, Steel Dynamics is 3.49 times less risky than Farm Pride. The stock trades about -0.29 of its potential returns per unit of risk. The Farm Pride Foods is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Farm Pride Foods on September 12, 2024 and sell it today you would lose (1.00) from holding Farm Pride Foods or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Steel Dynamics vs. Farm Pride Foods
Performance |
| Timeline |
| Steel Dynamics |
| Farm Pride Foods |
Steel Dynamics and Farm Pride Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Farm Pride
The main advantage of trading using opposite Steel Dynamics and Farm Pride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Farm Pride 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 Farm Pride will offset losses from the drop in Farm Pride'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 |
| Farm Pride vs. Medibank Private | Farm Pride vs. Kkr Credit Income | Farm Pride vs. Aurelia Metals | Farm Pride vs. Centuria Industrial Reit |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Commodity Directory Find actively traded commodities issued by global exchanges |