Correlation Between Steel Dynamics and Gmo International
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Gmo International 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 Gmo International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Gmo International Equity, you can compare the effects of market volatilities on Steel Dynamics and Gmo International 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 Gmo International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Gmo International.
Diversification Opportunities for Steel Dynamics and Gmo International
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Steel and Gmo is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Gmo International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo International 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 Gmo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo International Equity has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Gmo International go up and down completely randomly.
Pair Corralation between Steel Dynamics and Gmo International
Given the investment horizon of 90 days Steel Dynamics is expected to generate 2.36 times more return on investment than Gmo International. However, Steel Dynamics is 2.36 times more volatile than Gmo International Equity. It trades about 0.03 of its potential returns per unit of risk. Gmo International Equity is currently generating about 0.07 per unit of risk. If you would invest 12,043 in Steel Dynamics on September 12, 2024 and sell it today you would earn a total of 1,393 from holding Steel Dynamics or generate 11.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Steel Dynamics vs. Gmo International Equity
Performance |
| Timeline |
| Steel Dynamics |
| Gmo International Equity |
Steel Dynamics and Gmo International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Gmo International
The main advantage of trading using opposite Steel Dynamics and Gmo International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Gmo International 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 Gmo International will offset losses from the drop in Gmo International'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 |
| Gmo International vs. Oakmark International Fund | Gmo International vs. Dodge International Stock | Gmo International vs. Oakmark International Fund | Gmo International vs. Oakmark International Fund |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |