Correlation Between BLUESCOPE STEEL and EBay

Can any of the company-specific risk be diversified away by investing in both BLUESCOPE STEEL and EBay 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 BLUESCOPE STEEL and EBay into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BLUESCOPE STEEL and eBay Inc, you can compare the effects of market volatilities on BLUESCOPE STEEL and EBay 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 BLUESCOPE STEEL with a short position of EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLUESCOPE STEEL and EBay.

Diversification Opportunities for BLUESCOPE STEEL and EBay

0.56

Correlation Coefficient

BLUESCOPE STEEL  EBay

Very weak diversification

The 3 months correlation between BLUESCOPE and EBay is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BLUESCOPE STEEL and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc and BLUESCOPE 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 BLUESCOPE STEEL are associated (or correlated) with EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of BLUESCOPE STEEL i.e., BLUESCOPE STEEL and EBay go up and down completely randomly.

Pair Corralation between BLUESCOPE STEEL and EBay

Assuming the 90 days trading horizon BLUESCOPE STEEL is expected to generate 7.59 times less return on investment than EBay. In addition to that, BLUESCOPE STEEL is 1.21 times more volatile than eBay Inc. It trades about 0.01 of its total potential returns per unit of risk. eBay Inc is currently generating about 0.09 per unit of volatility. If you would invest  5,853  in eBay Inc on September 15, 2024 and sell it today you would earn a total of  204.00  from holding eBay Inc or generate 3.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

BLUESCOPE STEEL  vs.  eBay Inc

BLUESCOPE STEEL

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BLUESCOPE STEEL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BLUESCOPE STEEL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

eBay Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in eBay Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, EBay may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BLUESCOPE STEEL and EBay

The main advantage of trading using opposite BLUESCOPE STEEL and EBay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLUESCOPE STEEL position performs unexpectedly, EBay 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 EBay will offset losses from the drop in EBay's long position.

The idea behind BLUESCOPE STEEL and eBay Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.