Correlation Between Steel Dynamics and BROOKFIELD
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and BROOKFIELD 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 BROOKFIELD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and BROOKFIELD P CLA, you can compare the effects of market volatilities on Steel Dynamics and BROOKFIELD 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 BROOKFIELD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and BROOKFIELD.
Diversification Opportunities for Steel Dynamics and BROOKFIELD
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Steel and BROOKFIELD is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and BROOKFIELD P CLA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROOKFIELD P CLA 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 BROOKFIELD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROOKFIELD P CLA has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and BROOKFIELD go up and down completely randomly.
Pair Corralation between Steel Dynamics and BROOKFIELD
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.16 times less return on investment than BROOKFIELD. In addition to that, Steel Dynamics is 1.3 times more volatile than BROOKFIELD P CLA. It trades about 0.14 of its total potential returns per unit of risk. BROOKFIELD P CLA is currently generating about 0.21 per unit of volatility. If you would invest 4,440 in BROOKFIELD P CLA on September 12, 2024 and sell it today you would earn a total of 1,280 from holding BROOKFIELD P CLA or generate 28.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Steel Dynamics vs. BROOKFIELD P CLA
Performance |
| Timeline |
| Steel Dynamics |
| BROOKFIELD P CLA |
Steel Dynamics and BROOKFIELD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and BROOKFIELD
The main advantage of trading using opposite Steel Dynamics and BROOKFIELD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, BROOKFIELD 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 BROOKFIELD will offset losses from the drop in BROOKFIELD'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 |
| BROOKFIELD vs. National Health Investors | BROOKFIELD vs. JD SPORTS FASH | BROOKFIELD vs. TOWNSQUARE MEDIA INC | BROOKFIELD vs. HEALTHCARE REAL A |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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