Correlation Between Steel Dynamics and Herman Miller
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Herman Miller 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 Herman Miller into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Herman Miller, you can compare the effects of market volatilities on Steel Dynamics and Herman Miller 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 Herman Miller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Herman Miller.
Diversification Opportunities for Steel Dynamics and Herman Miller
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Steel and Herman is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Herman Miller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herman Miller 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 Herman Miller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herman Miller has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Herman Miller go up and down completely randomly.
Pair Corralation between Steel Dynamics and Herman Miller
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.47 times less return on investment than Herman Miller. In addition to that, Steel Dynamics is 1.75 times more volatile than Herman Miller. It trades about 0.14 of its total potential returns per unit of risk. Herman Miller is currently generating about 0.35 per unit of volatility. If you would invest 2,064 in Herman Miller on September 3, 2024 and sell it today you would earn a total of 316.00 from holding Herman Miller or generate 15.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Steel Dynamics vs. Herman Miller
Performance |
| Timeline |
| Steel Dynamics |
| Herman Miller |
Steel Dynamics and Herman Miller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Herman Miller
The main advantage of trading using opposite Steel Dynamics and Herman Miller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Herman Miller 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 Herman Miller will offset losses from the drop in Herman Miller'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 |
| Herman Miller vs. SERI INDUSTRIAL EO | Herman Miller vs. Meiko Electronics Co | Herman Miller vs. GALENA MINING LTD | Herman Miller vs. Zijin Mining Group |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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