Correlation Between Steel Dynamics and TTM Technologies
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and TTM Technologies 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 TTM Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and TTM Technologies, you can compare the effects of market volatilities on Steel Dynamics and TTM Technologies 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 TTM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and TTM Technologies.
Diversification Opportunities for Steel Dynamics and TTM Technologies
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and TTM is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and TTM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTM Technologies 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 TTM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTM Technologies has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and TTM Technologies go up and down completely randomly.
Pair Corralation between Steel Dynamics and TTM Technologies
Given the investment horizon of 90 days Steel Dynamics is expected to generate 2.19 times less return on investment than TTM Technologies. But when comparing it to its historical volatility, Steel Dynamics is 1.15 times less risky than TTM Technologies. It trades about 0.05 of its potential returns per unit of risk. TTM Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,700 in TTM Technologies on September 12, 2024 and sell it today you would earn a total of 600.00 from holding TTM Technologies or generate 35.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.88% |
| Values | Daily Returns |
Steel Dynamics vs. TTM Technologies
Performance |
| Timeline |
| Steel Dynamics |
| TTM Technologies |
Steel Dynamics and TTM Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and TTM Technologies
The main advantage of trading using opposite Steel Dynamics and TTM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, TTM Technologies 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 TTM Technologies will offset losses from the drop in TTM Technologies' 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 |
| TTM Technologies vs. Benchmark Electronics | TTM Technologies vs. Meiko Electronics Co | TTM Technologies vs. Superior Plus Corp | TTM Technologies vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |