Correlation Between Nucor Corp and Constellium

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

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

Diversification Opportunities for Nucor Corp and Constellium

0.01

Correlation Coefficient

Nucor Corp  Constellium

Significant diversification

The 3 months correlation between Nucor and Constellium is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nucor Corp and Constellium Nv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellium Nv and Nucor Corp 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 Nucor Corp are associated (or correlated) with Constellium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellium Nv has no effect on the direction of Nucor Corp i.e., Nucor Corp and Constellium go up and down completely randomly.

Pair Corralation between Nucor Corp and Constellium

Considering the 90-day investment horizon Nucor Corp is expected to generate 1.02 times less return on investment than Constellium. But when comparing it to its historical volatility, Nucor Corp is 1.47 times less risky than Constellium. It trades about 0.09 of its potential returns per unit of risk. Constellium Nv is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  997.00  in Constellium Nv on December 29, 2024 and sell it today you would earn a total of  90.00  from holding Constellium Nv or generate 9.03% return on investment over 90 days.

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

Nucor Corp  vs.  Constellium Nv

Nucor Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nucor Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Nucor Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Constellium Nv

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Constellium Nv are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Constellium may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nucor Corp and Constellium

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

The idea behind Nucor Corp and Constellium Nv 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.