Correlation Between Steel Dynamics and Jackson Square
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Jackson Square 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 Jackson Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Jackson Square Smid Cap, you can compare the effects of market volatilities on Steel Dynamics and Jackson Square 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 Jackson Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Jackson Square.
Diversification Opportunities for Steel Dynamics and Jackson Square
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and JACKSON is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Jackson Square Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Square Smid 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 Jackson Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackson Square Smid has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Jackson Square go up and down completely randomly.
Pair Corralation between Steel Dynamics and Jackson Square
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.9 times more return on investment than Jackson Square. However, Steel Dynamics is 1.9 times more volatile than Jackson Square Smid Cap. It trades about 0.04 of its potential returns per unit of risk. Jackson Square Smid Cap is currently generating about 0.03 per unit of risk. If you would invest 10,719 in Steel Dynamics on September 3, 2024 and sell it today you would earn a total of 3,808 from holding Steel Dynamics or generate 35.53% 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. Jackson Square Smid Cap
Performance |
| Timeline |
| Steel Dynamics |
| Jackson Square Smid |
Steel Dynamics and Jackson Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Jackson Square
The main advantage of trading using opposite Steel Dynamics and Jackson Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Jackson Square 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 Jackson Square will offset losses from the drop in Jackson Square'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 |
| Jackson Square vs. Franklin Growth Fund | Jackson Square vs. Janus Venture Fund | Jackson Square vs. Jackson Square Smid Cap | Jackson Square vs. Pimco Small Cap |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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