Correlation Between Steel Dynamics and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Rheinmetall 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 Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Rheinmetall AG, you can compare the effects of market volatilities on Steel Dynamics and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Rheinmetall.
Diversification Opportunities for Steel Dynamics and Rheinmetall
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Steel and Rheinmetall is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG 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 Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Rheinmetall go up and down completely randomly.
Pair Corralation between Steel Dynamics and Rheinmetall
Given the investment horizon of 90 days Steel Dynamics is expected to generate 2.95 times less return on investment than Rheinmetall. In addition to that, Steel Dynamics is 1.1 times more volatile than Rheinmetall AG. It trades about 0.04 of its total potential returns per unit of risk. Rheinmetall AG is currently generating about 0.13 per unit of volatility. If you would invest 19,384 in Rheinmetall AG on September 3, 2024 and sell it today you would earn a total of 42,936 from holding Rheinmetall AG or generate 221.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.02% |
| Values | Daily Returns |
Steel Dynamics vs. Rheinmetall AG
Performance |
| Timeline |
| Steel Dynamics |
| Rheinmetall AG |
Steel Dynamics and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Rheinmetall
The main advantage of trading using opposite Steel Dynamics and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall'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 |
| Rheinmetall vs. VIVA WINE GROUP | Rheinmetall vs. Compugroup Medical SE | Rheinmetall vs. Apollo Medical Holdings | Rheinmetall vs. VIRGIN WINES UK |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |