Correlation Between United States and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both United States and ArcelorMittal 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 United States and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and ArcelorMittal SA, you can compare the effects of market volatilities on United States and ArcelorMittal 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 United States with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and ArcelorMittal.
Diversification Opportunities for United States and ArcelorMittal
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and ArcelorMittal is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and ArcelorMittal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA and United States 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 United States Steel are associated (or correlated) with ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA has no effect on the direction of United States i.e., United States and ArcelorMittal go up and down completely randomly.
Pair Corralation between United States and ArcelorMittal
Assuming the 90 days trading horizon United States is expected to generate 1.2 times less return on investment than ArcelorMittal. In addition to that, United States is 2.15 times more volatile than ArcelorMittal SA. It trades about 0.05 of its total potential returns per unit of risk. ArcelorMittal SA is currently generating about 0.12 per unit of volatility. If you would invest 6,345 in ArcelorMittal SA on August 23, 2024 and sell it today you would earn a total of 1,026 from holding ArcelorMittal SA or generate 16.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. ArcelorMittal SA
Performance |
| Timeline |
| United States Steel |
| ArcelorMittal SA |
United States and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and ArcelorMittal
The main advantage of trading using opposite United States and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.| United States vs. Companhia Siderrgica Nacional | United States vs. Metalurgica Gerdau SA | United States vs. Metalurgica Gerdau SA | United States vs. Usinas Siderrgicas de |
| ArcelorMittal vs. United States Steel | ArcelorMittal vs. Companhia Siderrgica Nacional | ArcelorMittal vs. Metalurgica Gerdau SA | ArcelorMittal vs. Metalurgica Gerdau SA |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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