Correlation Between Steel Dynamics and HR Real
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and HR Real 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 HR Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and HR Real Estate, you can compare the effects of market volatilities on Steel Dynamics and HR Real 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 HR Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and HR Real.
Diversification Opportunities for Steel Dynamics and HR Real
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Steel and HRUFF is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and HR Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HR Real Estate 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 HR Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HR Real Estate has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and HR Real go up and down completely randomly.
Pair Corralation between Steel Dynamics and HR Real
Given the investment horizon of 90 days Steel Dynamics is expected to generate 2.16 times more return on investment than HR Real. However, Steel Dynamics is 2.16 times more volatile than HR Real Estate. It trades about 0.09 of its potential returns per unit of risk. HR Real Estate is currently generating about -0.21 per unit of risk. If you would invest 13,358 in Steel Dynamics on September 5, 2024 and sell it today you would earn a total of 780.00 from holding Steel Dynamics or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. HR Real Estate
Performance |
| Timeline |
| Steel Dynamics |
| HR Real Estate |
Steel Dynamics and HR Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and HR Real
The main advantage of trading using opposite Steel Dynamics and HR Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, HR Real 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 HR Real will offset losses from the drop in HR Real'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 |
| HR Real vs. Global Net Lease, | HR Real vs. VICI Properties | HR Real vs. Highlands REIT | HR Real vs. W P Carey |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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