Correlation Between Steel Dynamics and 98389BAU4
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By analyzing existing cross correlation between Steel Dynamics and XCEL ENERGY INC, you can compare the effects of market volatilities on Steel Dynamics and 98389BAU4 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 98389BAU4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and 98389BAU4.
Diversification Opportunities for Steel Dynamics and 98389BAU4
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Steel and 98389BAU4 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and XCEL ENERGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XCEL ENERGY INC 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 98389BAU4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XCEL ENERGY INC has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and 98389BAU4 go up and down completely randomly.
Pair Corralation between Steel Dynamics and 98389BAU4
Given the investment horizon of 90 days Steel Dynamics is expected to generate 5.78 times more return on investment than 98389BAU4. However, Steel Dynamics is 5.78 times more volatile than XCEL ENERGY INC. It trades about 0.05 of its potential returns per unit of risk. XCEL ENERGY INC is currently generating about 0.02 per unit of risk. If you would invest 9,879 in Steel Dynamics on August 31, 2024 and sell it today you would earn a total of 4,648 from holding Steel Dynamics or generate 47.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 83.47% |
| Values | Daily Returns |
Steel Dynamics vs. XCEL ENERGY INC
Performance |
| Timeline |
| Steel Dynamics |
| XCEL ENERGY INC |
Steel Dynamics and 98389BAU4 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and 98389BAU4
The main advantage of trading using opposite Steel Dynamics and 98389BAU4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, 98389BAU4 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 98389BAU4 will offset losses from the drop in 98389BAU4'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 |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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