Correlation Between Worthington Steel and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Worthington Steel and Algoma 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 Worthington Steel and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worthington Steel and Algoma Steel Group, you can compare the effects of market volatilities on Worthington Steel and Algoma 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 Worthington Steel with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worthington Steel and Algoma Steel.
Diversification Opportunities for Worthington Steel and Algoma Steel
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Worthington and Algoma is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Steel and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group and Worthington Steel 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 Worthington Steel are associated (or correlated) with Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of Worthington Steel i.e., Worthington Steel and Algoma Steel go up and down completely randomly.
Pair Corralation between Worthington Steel and Algoma Steel
Allowing for the 90-day total investment horizon Worthington Steel is expected to generate 1.24 times more return on investment than Algoma Steel. However, Worthington Steel is 1.24 times more volatile than Algoma Steel Group. It trades about 0.3 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.26 per unit of risk. If you would invest 3,462 in Worthington Steel on August 24, 2024 and sell it today you would earn a total of 933.00 from holding Worthington Steel or generate 26.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Worthington Steel vs. Algoma Steel Group
Performance |
| Timeline |
| Worthington Steel |
| Algoma Steel Group |
Worthington Steel and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worthington Steel and Algoma Steel
The main advantage of trading using opposite Worthington Steel and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worthington Steel position performs unexpectedly, Algoma 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.| Worthington Steel vs. Relx PLC ADR | Worthington Steel vs. 51Talk Online Education | Worthington Steel vs. Uranium Energy Corp | Worthington Steel vs. NioCorp Developments Ltd |
| Algoma Steel vs. Friedman Industries | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR | Algoma Steel vs. Algoma Steel Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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