Correlation Between Steel Dynamics and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and IShares 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 IShares 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 iShares MSCI Qatar, you can compare the effects of market volatilities on Steel Dynamics and IShares 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and IShares MSCI.
Diversification Opportunities for Steel Dynamics and IShares MSCI
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Steel and IShares is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and iShares MSCI Qatar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Qatar 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Qatar has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and IShares MSCI go up and down completely randomly.
Pair Corralation between Steel Dynamics and IShares MSCI
Given the investment horizon of 90 days Steel Dynamics is expected to generate 5.58 times more return on investment than IShares MSCI. However, Steel Dynamics is 5.58 times more volatile than iShares MSCI Qatar. It trades about 0.14 of its potential returns per unit of risk. iShares MSCI Qatar is currently generating about -0.08 per unit of risk. If you would invest 13,358 in Steel Dynamics on September 3, 2024 and sell it today you would earn a total of 1,169 from holding Steel Dynamics or generate 8.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. iShares MSCI Qatar
Performance |
| Timeline |
| Steel Dynamics |
| iShares MSCI Qatar |
Steel Dynamics and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and IShares MSCI
The main advantage of trading using opposite Steel Dynamics and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, IShares 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 IShares MSCI will offset losses from the drop in IShares 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 |
| IShares MSCI vs. iShares MSCI UAE | IShares MSCI vs. iShares MSCI Saudi | IShares MSCI vs. iShares MSCI New | IShares MSCI vs. iShares MSCI Finland |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |