Correlation Between Worthington Steel and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Worthington Steel 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 Worthington Steel and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worthington Steel and ArcelorMittal SA ADR, you can compare the effects of market volatilities on Worthington Steel 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 Worthington Steel with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worthington Steel and ArcelorMittal.
Diversification Opportunities for Worthington Steel and ArcelorMittal
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Worthington and ArcelorMittal is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Steel and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR 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 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 ADR has no effect on the direction of Worthington Steel i.e., Worthington Steel and ArcelorMittal go up and down completely randomly.
Pair Corralation between Worthington Steel and ArcelorMittal
Allowing for the 90-day total investment horizon Worthington Steel is expected to generate 2.02 times more return on investment than ArcelorMittal. However, Worthington Steel is 2.02 times more volatile than ArcelorMittal SA ADR. It trades about 0.08 of its potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about 0.01 per unit of risk. If you would invest 2,461 in Worthington Steel on September 2, 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 | Weak |
| Accuracy | 51.41% |
| Values | Daily Returns |
Worthington Steel vs. ArcelorMittal SA ADR
Performance |
| Timeline |
| Worthington Steel |
| ArcelorMittal SA ADR |
Worthington Steel and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worthington Steel and ArcelorMittal
The main advantage of trading using opposite Worthington Steel and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worthington Steel 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.| Worthington Steel vs. Aspen Insurance Holdings | Worthington Steel vs. Nike Inc | Worthington Steel vs. Old Republic International | Worthington Steel vs. Sable Offshore Corp |
| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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