Correlation Between Steel Dynamics and Metaline Contact
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Metaline Contact 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 Metaline Contact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Metaline Contact Mines, you can compare the effects of market volatilities on Steel Dynamics and Metaline Contact 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 Metaline Contact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Metaline Contact.
Diversification Opportunities for Steel Dynamics and Metaline Contact
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Steel and Metaline is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Metaline Contact Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metaline Contact Mines 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 Metaline Contact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metaline Contact Mines has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Metaline Contact go up and down completely randomly.
Pair Corralation between Steel Dynamics and Metaline Contact
Given the investment horizon of 90 days Steel Dynamics is expected to generate 5.09 times less return on investment than Metaline Contact. But when comparing it to its historical volatility, Steel Dynamics is 5.62 times less risky than Metaline Contact. It trades about 0.04 of its potential returns per unit of risk. Metaline Contact Mines is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Metaline Contact Mines on September 4, 2024 and sell it today you would earn a total of 0.00 from holding Metaline Contact Mines or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Steel Dynamics vs. Metaline Contact Mines
Performance |
| Timeline |
| Steel Dynamics |
| Metaline Contact Mines |
Steel Dynamics and Metaline Contact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Metaline Contact
The main advantage of trading using opposite Steel Dynamics and Metaline Contact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Metaline Contact 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 Metaline Contact will offset losses from the drop in Metaline Contact'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 |
| Metaline Contact vs. Azure Holding Group | Metaline Contact vs. Snoogoo Corp | Metaline Contact vs. Opus Magnum Ameris | Metaline Contact vs. Israel Acquisitions Corp |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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