Correlation Between 90331HPL1 and Steel Dynamics
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By analyzing existing cross correlation between US BANK NATIONAL and Steel Dynamics, you can compare the effects of market volatilities on 90331HPL1 and Steel Dynamics 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 90331HPL1 with a short position of Steel Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of 90331HPL1 and Steel Dynamics.
Diversification Opportunities for 90331HPL1 and Steel Dynamics
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between 90331HPL1 and Steel is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding US BANK NATIONAL and Steel Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Dynamics and 90331HPL1 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 US BANK NATIONAL are associated (or correlated) with Steel Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Dynamics has no effect on the direction of 90331HPL1 i.e., 90331HPL1 and Steel Dynamics go up and down completely randomly.
Pair Corralation between 90331HPL1 and Steel Dynamics
Assuming the 90 days trading horizon US BANK NATIONAL is expected to under-perform the Steel Dynamics. But the bond apears to be less risky and, when comparing its historical volatility, US BANK NATIONAL is 2.6 times less risky than Steel Dynamics. The bond trades about -0.2 of its potential returns per unit of risk. The Steel Dynamics is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 13,277 in Steel Dynamics on August 31, 2024 and sell it today you would earn a total of 1,106 from holding Steel Dynamics or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.18% |
| Values | Daily Returns |
US BANK NATIONAL vs. Steel Dynamics
Performance |
| Timeline |
| US BANK NATIONAL |
| Steel Dynamics |
90331HPL1 and Steel Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 90331HPL1 and Steel Dynamics
The main advantage of trading using opposite 90331HPL1 and Steel Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 90331HPL1 position performs unexpectedly, Steel Dynamics 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 Steel Dynamics will offset losses from the drop in Steel Dynamics' long position.The idea behind US BANK NATIONAL and Steel Dynamics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Steel Dynamics vs. Cleveland Cliffs | Steel Dynamics vs. United States Steel | Steel Dynamics vs. ArcelorMittal SA ADR | Steel Dynamics vs. Reliance Steel Aluminum |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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