Correlation Between Universal Stainless and Cleveland Cliffs
Can any of the company-specific risk be diversified away by investing in both Universal Stainless and Cleveland Cliffs 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 Universal Stainless and Cleveland Cliffs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Stainless Alloy and Cleveland Cliffs, you can compare the effects of market volatilities on Universal Stainless and Cleveland Cliffs 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 Universal Stainless with a short position of Cleveland Cliffs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Stainless and Cleveland Cliffs.
Diversification Opportunities for Universal Stainless and Cleveland Cliffs
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Universal and Cleveland is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Universal Stainless Alloy and Cleveland Cliffs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleveland Cliffs and Universal Stainless 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 Universal Stainless Alloy are associated (or correlated) with Cleveland Cliffs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleveland Cliffs has no effect on the direction of Universal Stainless i.e., Universal Stainless and Cleveland Cliffs go up and down completely randomly.
Pair Corralation between Universal Stainless and Cleveland Cliffs
Given the investment horizon of 90 days Universal Stainless Alloy is expected to generate 0.07 times more return on investment than Cleveland Cliffs. However, Universal Stainless Alloy is 14.84 times less risky than Cleveland Cliffs. It trades about 0.19 of its potential returns per unit of risk. Cleveland Cliffs is currently generating about -0.05 per unit of risk. If you would invest 4,364 in Universal Stainless Alloy on August 28, 2024 and sell it today you would earn a total of 70.00 from holding Universal Stainless Alloy or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Stainless Alloy vs. Cleveland Cliffs
Performance |
| Timeline |
| Universal Stainless Alloy |
| Cleveland Cliffs |
Universal Stainless and Cleveland Cliffs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Stainless and Cleveland Cliffs
The main advantage of trading using opposite Universal Stainless and Cleveland Cliffs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Stainless position performs unexpectedly, Cleveland Cliffs 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 Cleveland Cliffs will offset losses from the drop in Cleveland Cliffs' long position.| Universal Stainless vs. Olympic Steel | Universal Stainless vs. Outokumpu Oyj ADR | Universal Stainless vs. Usinas Siderurgicas de | Universal Stainless vs. POSCO Holdings |
| Cleveland Cliffs vs. Nucor Corp | Cleveland Cliffs vs. Steel Dynamics | Cleveland Cliffs vs. ArcelorMittal SA ADR | Cleveland Cliffs vs. Gerdau SA ADR |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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