Correlation Between Steel Dynamics and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Goldman Sachs 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 Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Goldman Sachs Equity, you can compare the effects of market volatilities on Steel Dynamics and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Goldman Sachs.
Diversification Opportunities for Steel Dynamics and Goldman Sachs
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and Goldman is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Goldman Sachs Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Equity 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Equity has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Goldman Sachs go up and down completely randomly.
Pair Corralation between Steel Dynamics and Goldman Sachs
Given the investment horizon of 90 days Steel Dynamics is expected to generate 2.52 times more return on investment than Goldman Sachs. However, Steel Dynamics is 2.52 times more volatile than Goldman Sachs Equity. It trades about 0.06 of its potential returns per unit of risk. Goldman Sachs Equity is currently generating about 0.08 per unit of risk. If you would invest 9,885 in Steel Dynamics on September 3, 2024 and sell it today you would earn a total of 4,642 from holding Steel Dynamics or generate 46.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. Goldman Sachs Equity
Performance |
| Timeline |
| Steel Dynamics |
| Goldman Sachs Equity |
Steel Dynamics and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Goldman Sachs
The main advantage of trading using opposite Steel Dynamics and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' 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 |
| Goldman Sachs vs. Artisan Global Unconstrained | Goldman Sachs vs. Commonwealth Global Fund | Goldman Sachs vs. Nationwide Global Equity | Goldman Sachs vs. Siit Global Managed |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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