Correlation Between Steel Dynamics and Vossloh AG
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Vossloh AG 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 Vossloh AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Vossloh AG, you can compare the effects of market volatilities on Steel Dynamics and Vossloh AG 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 Vossloh AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Vossloh AG.
Diversification Opportunities for Steel Dynamics and Vossloh AG
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Steel and Vossloh is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Vossloh AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vossloh 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 Vossloh AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vossloh AG has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Vossloh AG go up and down completely randomly.
Pair Corralation between Steel Dynamics and Vossloh AG
Given the investment horizon of 90 days Steel Dynamics is expected to under-perform the Vossloh AG. In addition to that, Steel Dynamics is 1.12 times more volatile than Vossloh AG. It trades about -0.3 of its total potential returns per unit of risk. Vossloh AG is currently generating about -0.05 per unit of volatility. If you would invest 4,405 in Vossloh AG on September 12, 2024 and sell it today you would lose (75.00) from holding Vossloh AG or give up 1.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Steel Dynamics vs. Vossloh AG
Performance |
| Timeline |
| Steel Dynamics |
| Vossloh AG |
Steel Dynamics and Vossloh AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Vossloh AG
The main advantage of trading using opposite Steel Dynamics and Vossloh AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Vossloh AG 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 Vossloh AG will offset losses from the drop in Vossloh AG'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 |
| Vossloh AG vs. Perseus Mining Limited | Vossloh AG vs. National Beverage Corp | Vossloh AG vs. TYSON FOODS A | Vossloh AG vs. Lifeway Foods |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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