Correlation Between Steel Dynamics and Thinkific Labs
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Thinkific Labs 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 Thinkific Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Thinkific Labs, you can compare the effects of market volatilities on Steel Dynamics and Thinkific Labs 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 Thinkific Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Thinkific Labs.
Diversification Opportunities for Steel Dynamics and Thinkific Labs
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Steel and Thinkific is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Thinkific Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thinkific Labs 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 Thinkific Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thinkific Labs has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Thinkific Labs go up and down completely randomly.
Pair Corralation between Steel Dynamics and Thinkific Labs
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.59 times less return on investment than Thinkific Labs. But when comparing it to its historical volatility, Steel Dynamics is 1.19 times less risky than Thinkific Labs. It trades about 0.13 of its potential returns per unit of risk. Thinkific Labs is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 194.00 in Thinkific Labs on September 4, 2024 and sell it today you would earn a total of 27.00 from holding Thinkific Labs or generate 13.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. Thinkific Labs
Performance |
| Timeline |
| Steel Dynamics |
| Thinkific Labs |
Steel Dynamics and Thinkific Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Thinkific Labs
The main advantage of trading using opposite Steel Dynamics and Thinkific Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Thinkific Labs 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 Thinkific Labs will offset losses from the drop in Thinkific Labs' 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 |
| Thinkific Labs vs. Salesforce | Thinkific Labs vs. SAP SE ADR | Thinkific Labs vs. ServiceNow | Thinkific Labs vs. Intuit Inc |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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