Correlation Between Steel Dynamics and World Growth
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and World Growth 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 World Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and World Growth Fund, you can compare the effects of market volatilities on Steel Dynamics and World Growth 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 World Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and World Growth.
Diversification Opportunities for Steel Dynamics and World Growth
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and World is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and World Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Growth 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 World Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Growth has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and World Growth go up and down completely randomly.
Pair Corralation between Steel Dynamics and World Growth
Given the investment horizon of 90 days Steel Dynamics is expected to generate 5.68 times more return on investment than World Growth. However, Steel Dynamics is 5.68 times more volatile than World Growth Fund. It trades about 0.09 of its potential returns per unit of risk. World Growth Fund is currently generating about 0.3 per unit of risk. If you would invest 13,358 in Steel Dynamics on September 5, 2024 and sell it today you would earn a total of 780.00 from holding Steel Dynamics or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. World Growth Fund
Performance |
| Timeline |
| Steel Dynamics |
| World Growth |
Steel Dynamics and World Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and World Growth
The main advantage of trading using opposite Steel Dynamics and World Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, World Growth 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 World Growth will offset losses from the drop in World Growth'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 |
| World Growth vs. Income Fund Income | World Growth vs. Usaa Nasdaq 100 | World Growth vs. Victory Diversified Stock | World Growth vs. Intermediate Term Bond Fund |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |