Correlation Between Steel Dynamics and Deutsche Global
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Deutsche Global 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 Deutsche Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Deutsche Global Income, you can compare the effects of market volatilities on Steel Dynamics and Deutsche Global 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 Deutsche Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Deutsche Global.
Diversification Opportunities for Steel Dynamics and Deutsche Global
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Steel and Deutsche is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Deutsche Global Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Global Income 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 Deutsche Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Global Income has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Deutsche Global go up and down completely randomly.
Pair Corralation between Steel Dynamics and Deutsche Global
Given the investment horizon of 90 days Steel Dynamics is expected to generate 3.94 times more return on investment than Deutsche Global. However, Steel Dynamics is 3.94 times more volatile than Deutsche Global Income. It trades about 0.05 of its potential returns per unit of risk. Deutsche Global Income is currently generating about 0.12 per unit of risk. If you would invest 10,201 in Steel Dynamics on September 12, 2024 and sell it today you would earn a total of 3,256 from holding Steel Dynamics or generate 31.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.7% |
| Values | Daily Returns |
Steel Dynamics vs. Deutsche Global Income
Performance |
| Timeline |
| Steel Dynamics |
| Deutsche Global Income |
Steel Dynamics and Deutsche Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Deutsche Global
The main advantage of trading using opposite Steel Dynamics and Deutsche Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Deutsche Global 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 Deutsche Global will offset losses from the drop in Deutsche Global'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 |
| Deutsche Global vs. Capital Income Builder | Deutsche Global vs. Capital Income Builder | Deutsche Global vs. Capital Income Builder | Deutsche Global vs. Capital Income Builder |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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