Correlation Between Steel Dynamics and Intel
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Intel 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 Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Intel, you can compare the effects of market volatilities on Steel Dynamics and Intel 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 Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Intel.
Diversification Opportunities for Steel Dynamics and Intel
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Steel and Intel is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Intel go up and down completely randomly.
Pair Corralation between Steel Dynamics and Intel
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.73 times less return on investment than Intel. In addition to that, Steel Dynamics is 1.05 times more volatile than Intel. It trades about 0.13 of its total potential returns per unit of risk. Intel is currently generating about 0.23 per unit of volatility. If you would invest 2,040 in Intel on September 4, 2024 and sell it today you would earn a total of 343.00 from holding Intel or generate 16.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Steel Dynamics vs. Intel
Performance |
| Timeline |
| Steel Dynamics |
| Intel |
Steel Dynamics and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Intel
The main advantage of trading using opposite Steel Dynamics and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel'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 |
| Intel vs. Hochschild Mining plc | Intel vs. ANGLER GAMING PLC | Intel vs. PARKEN Sport Entertainment | Intel vs. Seven West Media |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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