Correlation Between Steel Dynamics and Valora Cri
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Valora Cri 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 Valora Cri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Valora Cri Indice, you can compare the effects of market volatilities on Steel Dynamics and Valora Cri 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 Valora Cri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Valora Cri.
Diversification Opportunities for Steel Dynamics and Valora Cri
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Steel and Valora is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Valora Cri Indice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valora Cri Indice 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 Valora Cri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valora Cri Indice has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Valora Cri go up and down completely randomly.
Pair Corralation between Steel Dynamics and Valora Cri
Given the investment horizon of 90 days Steel Dynamics is expected to generate 2.49 times more return on investment than Valora Cri. However, Steel Dynamics is 2.49 times more volatile than Valora Cri Indice. It trades about 0.06 of its potential returns per unit of risk. Valora Cri Indice is currently generating about -0.05 per unit of risk. If you would invest 11,317 in Steel Dynamics on September 4, 2024 and sell it today you would earn a total of 3,164 from holding Steel Dynamics or generate 27.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Steel Dynamics vs. Valora Cri Indice
Performance |
| Timeline |
| Steel Dynamics |
| Valora Cri Indice |
Steel Dynamics and Valora Cri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Valora Cri
The main advantage of trading using opposite Steel Dynamics and Valora Cri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Valora Cri 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 Valora Cri will offset losses from the drop in Valora Cri'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 |
| Valora Cri vs. Fras le SA | Valora Cri vs. Western Digital | Valora Cri vs. Clave Indices De | Valora Cri vs. BTG Pactual Logstica |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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