Correlation Between Worthington Steel and Commercial Metals
Can any of the company-specific risk be diversified away by investing in both Worthington Steel and Commercial Metals 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 Commercial Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worthington Steel and Commercial Metals, you can compare the effects of market volatilities on Worthington Steel and Commercial Metals 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 Commercial Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worthington Steel and Commercial Metals.
Diversification Opportunities for Worthington Steel and Commercial Metals
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Worthington and Commercial is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Steel and Commercial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Metals 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 Commercial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Metals has no effect on the direction of Worthington Steel i.e., Worthington Steel and Commercial Metals go up and down completely randomly.
Pair Corralation between Worthington Steel and Commercial Metals
Allowing for the 90-day total investment horizon Worthington Steel is expected to generate 1.95 times more return on investment than Commercial Metals. However, Worthington Steel is 1.95 times more volatile than Commercial Metals. It trades about 0.08 of its potential returns per unit of risk. Commercial Metals is currently generating about 0.05 per unit of risk. If you would invest 2,461 in Worthington Steel on August 31, 2024 and sell it today you would earn a total of 2,023 from holding Worthington Steel or generate 82.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 68.18% |
| Values | Daily Returns |
Worthington Steel vs. Commercial Metals
Performance |
| Timeline |
| Worthington Steel |
| Commercial Metals |
Worthington Steel and Commercial Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worthington Steel and Commercial Metals
The main advantage of trading using opposite Worthington Steel and Commercial Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worthington Steel position performs unexpectedly, Commercial Metals 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 Commercial Metals will offset losses from the drop in Commercial Metals' long position.| Worthington Steel vs. Ambev SA ADR | Worthington Steel vs. SNDL Inc | Worthington Steel vs. Freedom Holding Corp | Worthington Steel vs. Kite Realty Group |
| Commercial Metals vs. Nucor Corp | Commercial Metals vs. Steel Dynamics | Commercial Metals vs. ArcelorMittal SA ADR | Commercial Metals 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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