Correlation Between Steel Dynamics and Spearmint Resources
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Spearmint Resources 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 Spearmint Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Spearmint Resources, you can compare the effects of market volatilities on Steel Dynamics and Spearmint Resources 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 Spearmint Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Spearmint Resources.
Diversification Opportunities for Steel Dynamics and Spearmint Resources
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Steel and Spearmint is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Spearmint Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spearmint Resources 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 Spearmint Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spearmint Resources has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Spearmint Resources go up and down completely randomly.
Pair Corralation between Steel Dynamics and Spearmint Resources
Given the investment horizon of 90 days Steel Dynamics is expected to generate 103.21 times less return on investment than Spearmint Resources. But when comparing it to its historical volatility, Steel Dynamics is 9.64 times less risky than Spearmint Resources. It trades about 0.01 of its potential returns per unit of risk. Spearmint Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1.80 in Spearmint Resources on September 4, 2024 and sell it today you would lose (0.26) from holding Spearmint Resources or give up 14.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Steel Dynamics vs. Spearmint Resources
Performance |
| Timeline |
| Steel Dynamics |
| Spearmint Resources |
Steel Dynamics and Spearmint Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Spearmint Resources
The main advantage of trading using opposite Steel Dynamics and Spearmint Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Spearmint Resources 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 Spearmint Resources will offset losses from the drop in Spearmint Resources' 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 |
| Spearmint Resources vs. Qubec Nickel Corp | Spearmint Resources vs. IGO Limited | Spearmint Resources vs. Avarone Metals | Spearmint Resources vs. Adriatic Metals PLC |
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 CEOs Directory module to screen CEOs from public companies around the world.
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