Correlation Between Yokohama Rubber and STEEL DYNAMICS
Can any of the company-specific risk be diversified away by investing in both Yokohama Rubber and STEEL DYNAMICS 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 Yokohama Rubber and STEEL DYNAMICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Yokohama Rubber and STEEL DYNAMICS, you can compare the effects of market volatilities on Yokohama Rubber and STEEL DYNAMICS 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 Yokohama Rubber with a short position of STEEL DYNAMICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokohama Rubber and STEEL DYNAMICS.
Diversification Opportunities for Yokohama Rubber and STEEL DYNAMICS
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Yokohama and STEEL is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Yokohama Rubber and STEEL DYNAMICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEL DYNAMICS and Yokohama Rubber 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 The Yokohama Rubber are associated (or correlated) with STEEL DYNAMICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEEL DYNAMICS has no effect on the direction of Yokohama Rubber i.e., Yokohama Rubber and STEEL DYNAMICS go up and down completely randomly.
Pair Corralation between Yokohama Rubber and STEEL DYNAMICS
Assuming the 90 days trading horizon The Yokohama Rubber is expected to generate 0.69 times more return on investment than STEEL DYNAMICS. However, The Yokohama Rubber is 1.44 times less risky than STEEL DYNAMICS. It trades about 0.14 of its potential returns per unit of risk. STEEL DYNAMICS is currently generating about -0.43 per unit of risk. If you would invest 1,960 in The Yokohama Rubber on October 10, 2024 and sell it today you would earn a total of 60.00 from holding The Yokohama Rubber or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Yokohama Rubber vs. STEEL DYNAMICS
Performance |
| Timeline |
| Yokohama Rubber |
| STEEL DYNAMICS |
Yokohama Rubber and STEEL DYNAMICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yokohama Rubber and STEEL DYNAMICS
The main advantage of trading using opposite Yokohama Rubber and STEEL DYNAMICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yokohama Rubber position performs unexpectedly, STEEL DYNAMICS 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 STEEL DYNAMICS will offset losses from the drop in STEEL DYNAMICS's long position.| Yokohama Rubber vs. Cairo Communication SpA | Yokohama Rubber vs. Charter Communications | Yokohama Rubber vs. Telecom Argentina SA | Yokohama Rubber vs. NORTHEAST UTILITIES |
| STEEL DYNAMICS vs. ETFS Coffee ETC | STEEL DYNAMICS vs. The Yokohama Rubber | STEEL DYNAMICS vs. APPLIED MATERIALS | STEEL DYNAMICS vs. Darden Restaurants |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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