Correlation Between United States and EQT AB
Can any of the company-specific risk be diversified away by investing in both United States and EQT AB 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 EQT AB 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 EQT AB, you can compare the effects of market volatilities on United States and EQT AB 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 EQT AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and EQT AB.
Diversification Opportunities for United States and EQT AB
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and EQT is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and EQT AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQT AB 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 EQT AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQT AB has no effect on the direction of United States i.e., United States and EQT AB go up and down completely randomly.
Pair Corralation between United States and EQT AB
Assuming the 90 days trading horizon United States Steel is expected to generate 1.25 times more return on investment than EQT AB. However, United States is 1.25 times more volatile than EQT AB. It trades about 0.06 of its potential returns per unit of risk. EQT AB is currently generating about 0.04 per unit of risk. If you would invest 3,058 in United States Steel on September 12, 2024 and sell it today you would earn a total of 242.00 from holding United States Steel or generate 7.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
United States Steel vs. EQT AB
Performance |
| Timeline |
| United States Steel |
| EQT AB |
United States and EQT AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and EQT AB
The main advantage of trading using opposite United States and EQT AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, EQT AB 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 EQT AB will offset losses from the drop in EQT AB's long position.| United States vs. ArcelorMittal | United States vs. NIPPON STEEL SPADR | United States vs. Reliance Steel Aluminum | United States vs. Superior Plus Corp |
| EQT AB vs. Sumitomo Rubber Industries | EQT AB vs. Rayonier Advanced Materials | EQT AB vs. ELECTRONIC ARTS | EQT AB vs. LPKF Laser Electronics |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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