Correlation Between Steel Dynamics and Marks
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Marks 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 Marks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Marks and Spencer, you can compare the effects of market volatilities on Steel Dynamics and Marks 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 Marks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Marks.
Diversification Opportunities for Steel Dynamics and Marks
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Steel and Marks is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer 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 Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Marks go up and down completely randomly.
Pair Corralation between Steel Dynamics and Marks
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.62 times less return on investment than Marks. In addition to that, Steel Dynamics is 1.19 times more volatile than Marks and Spencer. It trades about 0.06 of its total potential returns per unit of risk. Marks and Spencer is currently generating about 0.12 per unit of volatility. If you would invest 361.00 in Marks and Spencer on September 5, 2024 and sell it today you would earn a total of 108.00 from holding Marks and Spencer or generate 29.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.9% |
| Values | Daily Returns |
Steel Dynamics vs. Marks and Spencer
Performance |
| Timeline |
| Steel Dynamics |
| Marks and Spencer |
Steel Dynamics and Marks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Marks
The main advantage of trading using opposite Steel Dynamics and Marks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Marks 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 Marks will offset losses from the drop in Marks' 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 |
| Marks vs. CarsalesCom | Marks vs. MAVEN WIRELESS SWEDEN | Marks vs. Entravision Communications | Marks vs. TRADEGATE |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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