Correlation Between Steel Dynamics and UNION
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By analyzing existing cross correlation between Steel Dynamics and UNION ELEC 4, you can compare the effects of market volatilities on Steel Dynamics and UNION 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 UNION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and UNION.
Diversification Opportunities for Steel Dynamics and UNION
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Steel and UNION is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and UNION ELEC 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNION ELEC 4 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 UNION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNION ELEC 4 has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and UNION go up and down completely randomly.
Pair Corralation between Steel Dynamics and UNION
Given the investment horizon of 90 days Steel Dynamics is expected to under-perform the UNION. In addition to that, Steel Dynamics is 1.55 times more volatile than UNION ELEC 4. It trades about -0.3 of its total potential returns per unit of risk. UNION ELEC 4 is currently generating about 0.41 per unit of volatility. If you would invest 7,979 in UNION ELEC 4 on September 12, 2024 and sell it today you would earn a total of 293.00 from holding UNION ELEC 4 or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 45.45% |
| Values | Daily Returns |
Steel Dynamics vs. UNION ELEC 4
Performance |
| Timeline |
| Steel Dynamics |
| UNION ELEC 4 |
Steel Dynamics and UNION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and UNION
The main advantage of trading using opposite Steel Dynamics and UNION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, UNION 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 UNION will offset losses from the drop in UNION'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 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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