Correlation Between Steel Dynamics and Lyxor MSCI
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Lyxor MSCI 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 Lyxor MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Lyxor MSCI China, you can compare the effects of market volatilities on Steel Dynamics and Lyxor MSCI 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 Lyxor MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Lyxor MSCI.
Diversification Opportunities for Steel Dynamics and Lyxor MSCI
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Steel and Lyxor is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Lyxor MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor MSCI China 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 Lyxor MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor MSCI China has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Lyxor MSCI go up and down completely randomly.
Pair Corralation between Steel Dynamics and Lyxor MSCI
Given the investment horizon of 90 days Steel Dynamics is expected to generate 0.87 times more return on investment than Lyxor MSCI. However, Steel Dynamics is 1.15 times less risky than Lyxor MSCI. It trades about 0.05 of its potential returns per unit of risk. Lyxor MSCI China is currently generating about 0.02 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 | Weak |
| Accuracy | 85.8% |
| Values | Daily Returns |
Steel Dynamics vs. Lyxor MSCI China
Performance |
| Timeline |
| Steel Dynamics |
| Lyxor MSCI China |
Steel Dynamics and Lyxor MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Lyxor MSCI
The main advantage of trading using opposite Steel Dynamics and Lyxor MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Lyxor MSCI 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 Lyxor MSCI will offset losses from the drop in Lyxor MSCI'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 |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |