Correlation Between Steel Dynamics and Israel Discount
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Israel Discount 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 Israel Discount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Israel Discount Bank, you can compare the effects of market volatilities on Steel Dynamics and Israel Discount 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 Israel Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Israel Discount.
Diversification Opportunities for Steel Dynamics and Israel Discount
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and Israel is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Israel Discount Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Discount Bank 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 Israel Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Discount Bank has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Israel Discount go up and down completely randomly.
Pair Corralation between Steel Dynamics and Israel Discount
If you would invest 13,572 in Steel Dynamics on August 29, 2024 and sell it today you would earn a total of 791.00 from holding Steel Dynamics or generate 5.83% 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. Israel Discount Bank
Performance |
| Timeline |
| Steel Dynamics |
| Israel Discount Bank |
Steel Dynamics and Israel Discount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Israel Discount
The main advantage of trading using opposite Steel Dynamics and Israel Discount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Israel Discount 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 Israel Discount will offset losses from the drop in Israel Discount's long position.The idea behind Steel Dynamics and Israel Discount Bank 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.| Israel Discount vs. Baraboo Bancorporation | Israel Discount vs. Schweizerische Nationalbank | Israel Discount vs. Danske Bank AS | Israel Discount vs. Absa Group Limited |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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