Correlation Between Steel Dynamics and ENERGY
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By analyzing existing cross correlation between Steel Dynamics and ENERGY TRANSFER PARTNERS, you can compare the effects of market volatilities on Steel Dynamics and ENERGY 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 ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and ENERGY.
Diversification Opportunities for Steel Dynamics and ENERGY
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Steel and ENERGY is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and ENERGY TRANSFER PARTNERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGY TRANSFER PARTNERS 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 ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGY TRANSFER PARTNERS has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and ENERGY go up and down completely randomly.
Pair Corralation between Steel Dynamics and ENERGY
Given the investment horizon of 90 days Steel Dynamics is expected to generate 2.42 times more return on investment than ENERGY. However, Steel Dynamics is 2.42 times more volatile than ENERGY TRANSFER PARTNERS. It trades about 0.11 of its potential returns per unit of risk. ENERGY TRANSFER PARTNERS is currently generating about -0.14 per unit of risk. If you would invest 13,572 in Steel Dynamics on August 28, 2024 and sell it today you would earn a total of 926.00 from holding Steel Dynamics or generate 6.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 71.43% |
| Values | Daily Returns |
Steel Dynamics vs. ENERGY TRANSFER PARTNERS
Performance |
| Timeline |
| Steel Dynamics |
| ENERGY TRANSFER PARTNERS |
Steel Dynamics and ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and ENERGY
The main advantage of trading using opposite Steel Dynamics and ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, ENERGY 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 ENERGY will offset losses from the drop in ENERGY's long position.The idea behind Steel Dynamics and ENERGY TRANSFER PARTNERS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ENERGY vs. Addus HomeCare | ENERGY vs. Weyco Group | ENERGY vs. MI Homes | ENERGY vs. Hudson Pacific Properties |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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