Correlation Between Steel Dynamics and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Lord Abbett 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 Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Lord Abbett Global, you can compare the effects of market volatilities on Steel Dynamics and Lord Abbett 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 Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Lord Abbett.
Diversification Opportunities for Steel Dynamics and Lord Abbett
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Steel and Lord is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Lord Abbett Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Global 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 Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Global has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Lord Abbett go up and down completely randomly.
Pair Corralation between Steel Dynamics and Lord Abbett
Given the investment horizon of 90 days Steel Dynamics is expected to generate 5.06 times more return on investment than Lord Abbett. However, Steel Dynamics is 5.06 times more volatile than Lord Abbett Global. It trades about 0.06 of its potential returns per unit of risk. Lord Abbett Global is currently generating about 0.1 per unit of risk. If you would invest 9,885 in Steel Dynamics on September 4, 2024 and sell it today you would earn a total of 4,596 from holding Steel Dynamics or generate 46.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 7.51% |
| Values | Daily Returns |
Steel Dynamics vs. Lord Abbett Global
Performance |
| Timeline |
| Steel Dynamics |
| Lord Abbett Global |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Steel Dynamics and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Lord Abbett
The main advantage of trading using opposite Steel Dynamics and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Lord Abbett 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 Lord Abbett will offset losses from the drop in Lord Abbett'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 |
| Lord Abbett vs. Massmutual Select Small | Lord Abbett vs. Qs Small Capitalization | Lord Abbett vs. Ancorathelen Small Mid Cap | Lord Abbett vs. Oklahoma College Savings |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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