Correlation Between Ternium SA and Worthington Steel
Can any of the company-specific risk be diversified away by investing in both Ternium SA and Worthington Steel 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 Ternium SA and Worthington Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ternium SA ADR and Worthington Steel, you can compare the effects of market volatilities on Ternium SA and Worthington Steel 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 Ternium SA with a short position of Worthington Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and Worthington Steel.
Diversification Opportunities for Ternium SA and Worthington Steel
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ternium and Worthington is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA ADR and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel and Ternium SA 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 Ternium SA ADR are associated (or correlated) with Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of Ternium SA i.e., Ternium SA and Worthington Steel go up and down completely randomly.
Pair Corralation between Ternium SA and Worthington Steel
Allowing for the 90-day total investment horizon Ternium SA is expected to generate 4.84 times less return on investment than Worthington Steel. But when comparing it to its historical volatility, Ternium SA ADR is 2.1 times less risky than Worthington Steel. It trades about 0.04 of its potential returns per unit of risk. Worthington Steel is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,461 in Worthington Steel on September 2, 2024 and sell it today you would earn a total of 2,023 from holding Worthington Steel or generate 82.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 51.41% |
| Values | Daily Returns |
Ternium SA ADR vs. Worthington Steel
Performance |
| Timeline |
| Ternium SA ADR |
| Worthington Steel |
Ternium SA and Worthington Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ternium SA and Worthington Steel
The main advantage of trading using opposite Ternium SA and Worthington Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA position performs unexpectedly, Worthington Steel 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 Worthington Steel will offset losses from the drop in Worthington Steel's long position.| Ternium SA vs. POSCO Holdings | Ternium SA vs. Steel Dynamics | Ternium SA vs. Gerdau SA ADR | Ternium SA vs. Nucor Corp |
| Worthington Steel vs. Aspen Insurance Holdings | Worthington Steel vs. Nike Inc | Worthington Steel vs. Old Republic International | Worthington Steel vs. Sable Offshore Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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