Correlation Between Steel Dynamics and Ngx Energy
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Ngx Energy 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 Ngx Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Ngx Energy International, you can compare the effects of market volatilities on Steel Dynamics and Ngx Energy 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 Ngx Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Ngx Energy.
Diversification Opportunities for Steel Dynamics and Ngx Energy
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Steel and Ngx is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Ngx Energy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ngx Energy International 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 Ngx Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ngx Energy International has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Ngx Energy go up and down completely randomly.
Pair Corralation between Steel Dynamics and Ngx Energy
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.39 times less return on investment than Ngx Energy. But when comparing it to its historical volatility, Steel Dynamics is 2.59 times less risky than Ngx Energy. It trades about 0.04 of its potential returns per unit of risk. Ngx Energy International is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 72.00 in Ngx Energy International on August 26, 2024 and sell it today you would lose (9.00) from holding Ngx Energy International or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. Ngx Energy International
Performance |
| Timeline |
| Steel Dynamics |
| Ngx Energy International |
Steel Dynamics and Ngx Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Ngx Energy
The main advantage of trading using opposite Steel Dynamics and Ngx Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Ngx Energy 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 Ngx Energy will offset losses from the drop in Ngx Energy's long position.The idea behind Steel Dynamics and Ngx Energy International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ngx Energy vs. Permian Resources | Ngx Energy vs. Devon Energy | Ngx Energy vs. EOG Resources | Ngx Energy vs. Coterra Energy |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |