Correlation Between Steel Dynamics and Vanguard EUR
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Vanguard EUR 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 Vanguard EUR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Vanguard EUR Eurozone, you can compare the effects of market volatilities on Steel Dynamics and Vanguard EUR 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 Vanguard EUR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Vanguard EUR.
Diversification Opportunities for Steel Dynamics and Vanguard EUR
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Steel and Vanguard is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Vanguard EUR Eurozone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard EUR Eurozone 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 Vanguard EUR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard EUR Eurozone has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Vanguard EUR go up and down completely randomly.
Pair Corralation between Steel Dynamics and Vanguard EUR
Given the investment horizon of 90 days Steel Dynamics is expected to generate 15.28 times more return on investment than Vanguard EUR. However, Steel Dynamics is 15.28 times more volatile than Vanguard EUR Eurozone. It trades about 0.14 of its potential returns per unit of risk. Vanguard EUR Eurozone is currently generating about 0.46 per unit of risk. If you would invest 13,358 in Steel Dynamics on September 3, 2024 and sell it today you would earn a total of 1,169 from holding Steel Dynamics or generate 8.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Steel Dynamics vs. Vanguard EUR Eurozone
Performance |
| Timeline |
| Steel Dynamics |
| Vanguard EUR Eurozone |
Steel Dynamics and Vanguard EUR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Vanguard EUR
The main advantage of trading using opposite Steel Dynamics and Vanguard EUR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Vanguard EUR 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 Vanguard EUR will offset losses from the drop in Vanguard EUR'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 |
| Vanguard EUR vs. Vanguard FTSE Developed | Vanguard EUR vs. HSBC MSCI Japan | Vanguard EUR vs. iShares II Public | Vanguard EUR vs. Hydratec Industries NV |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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