Correlation Between Steel Dynamics and God Bless
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and God Bless 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 God Bless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and God Bless America, you can compare the effects of market volatilities on Steel Dynamics and God Bless 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 God Bless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and God Bless.
Diversification Opportunities for Steel Dynamics and God Bless
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and God is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and God Bless America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on God Bless America 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 God Bless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of God Bless America has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and God Bless go up and down completely randomly.
Pair Corralation between Steel Dynamics and God Bless
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.51 times less return on investment than God Bless. In addition to that, Steel Dynamics is 3.07 times more volatile than God Bless America. It trades about 0.07 of its total potential returns per unit of risk. God Bless America is currently generating about 0.33 per unit of volatility. If you would invest 3,729 in God Bless America on September 6, 2024 and sell it today you would earn a total of 302.00 from holding God Bless America or generate 8.1% 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. God Bless America
Performance |
| Timeline |
| Steel Dynamics |
| God Bless America |
Steel Dynamics and God Bless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and God Bless
The main advantage of trading using opposite Steel Dynamics and God Bless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, God Bless 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 God Bless will offset losses from the drop in God Bless' 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 |
| God Bless vs. Point Bridge GOP | God Bless vs. EA Series Trust | God Bless vs. EA Series Trust | God Bless vs. ETF Opportunities Trust |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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