Correlation Between Steel Dynamics and Nevada King
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Nevada King 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 Nevada King into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Nevada King Gold, you can compare the effects of market volatilities on Steel Dynamics and Nevada King 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 Nevada King. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Nevada King.
Diversification Opportunities for Steel Dynamics and Nevada King
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Steel and Nevada is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Nevada King Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nevada King Gold 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 Nevada King. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nevada King Gold has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Nevada King go up and down completely randomly.
Pair Corralation between Steel Dynamics and Nevada King
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.08 times more return on investment than Nevada King. However, Steel Dynamics is 1.08 times more volatile than Nevada King Gold. It trades about 0.13 of its potential returns per unit of risk. Nevada King Gold is currently generating about -0.17 per unit of risk. If you would invest 13,358 in Steel Dynamics on September 4, 2024 and sell it today you would earn a total of 1,123 from holding Steel Dynamics or generate 8.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Steel Dynamics vs. Nevada King Gold
Performance |
| Timeline |
| Steel Dynamics |
| Nevada King Gold |
Steel Dynamics and Nevada King Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Nevada King
The main advantage of trading using opposite Steel Dynamics and Nevada King positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Nevada King 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 Nevada King will offset losses from the drop in Nevada King'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 |
| Nevada King vs. New Found Gold | Nevada King vs. Goliath Resources | Nevada King vs. Lion One Metals | Nevada King vs. Dolly Varden Silver |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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