Correlation Between Steel Dynamics and Strattner Financial
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Strattner Financial 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 Strattner Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Strattner Financial Group, you can compare the effects of market volatilities on Steel Dynamics and Strattner Financial 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 Strattner Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Strattner Financial.
Diversification Opportunities for Steel Dynamics and Strattner Financial
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Steel and Strattner is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Strattner Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strattner Financial 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 Strattner Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strattner Financial has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Strattner Financial go up and down completely randomly.
Pair Corralation between Steel Dynamics and Strattner Financial
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 Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Steel Dynamics vs. Strattner Financial Group
Performance |
| Timeline |
| Steel Dynamics |
| Strattner Financial |
Steel Dynamics and Strattner Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Strattner Financial
The main advantage of trading using opposite Steel Dynamics and Strattner Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Strattner Financial 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 Strattner Financial will offset losses from the drop in Strattner Financial'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 |
| Strattner Financial vs. Dorchester Minerals LP | Strattner Financial vs. 88 Energy Limited | Strattner Financial vs. Hess Corporation | Strattner Financial vs. Antero Resources 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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