Correlation Between Chart Industries and Worthington Steel

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

By analyzing existing cross correlation between Chart Industries and Worthington Steel, you can compare the effects of market volatilities on Chart Industries and Worthington 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 Chart Industries with a short position of Worthington Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chart Industries and Worthington Steel.

Diversification Opportunities for Chart Industries and Worthington Steel

-0.05

Correlation Coefficient

Chart Industries  Worthington Steel

Good diversification

The 3 months correlation between Chart and Worthington is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel and Chart Industries 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 Chart Industries are associated (or correlated) with Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of Chart Industries i.e., Chart Industries and Worthington Steel go up and down completely randomly.

Pair Corralation between Chart Industries and Worthington Steel

Assuming the 90 days trading horizon Chart Industries is expected to generate 1.1 times more return on investment than Worthington Steel. However, Chart Industries is 1.1 times more volatile than Worthington Steel. It trades about 0.33 of its potential returns per unit of risk. Worthington Steel is currently generating about -0.1 per unit of risk. If you would invest  7,000  in Chart Industries on October 24, 2024 and sell it today you would earn a total of  1,008  from holding Chart Industries or generate 14.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Chart Industries  vs.  Worthington Steel

Chart Industries

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Chart Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

Worthington Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worthington Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Chart Industries and Worthington Steel

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

The idea behind Chart Industries and Worthington Steel 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.