Correlation Between Steel Dynamics and Voestalpine
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Voestalpine 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 Voestalpine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Voestalpine AG, you can compare the effects of market volatilities on Steel Dynamics and Voestalpine 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 Voestalpine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Voestalpine.
Diversification Opportunities for Steel Dynamics and Voestalpine
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Steel and Voestalpine is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Voestalpine AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voestalpine AG 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 Voestalpine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voestalpine AG has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Voestalpine go up and down completely randomly.
Pair Corralation between Steel Dynamics and Voestalpine
If you would invest 13,277 in Steel Dynamics on August 31, 2024 and sell it today you would earn a total of 1,265 from holding Steel Dynamics or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Steel Dynamics vs. Voestalpine AG
Performance |
| Timeline |
| Steel Dynamics |
| Voestalpine AG |
Steel Dynamics and Voestalpine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Voestalpine
The main advantage of trading using opposite Steel Dynamics and Voestalpine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Voestalpine 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 Voestalpine will offset losses from the drop in Voestalpine'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 |
| Voestalpine vs. Steel Dynamics | Voestalpine vs. Huadi International Group | Voestalpine vs. Nucor Corp | Voestalpine vs. Cleveland Cliffs |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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