Correlation Between Nucor Corp and Hudbay Minerals

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

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

Diversification Opportunities for Nucor Corp and Hudbay Minerals

0.62

Correlation Coefficient

Nucor Corp  Hudbay Minerals

Poor diversification

The 3 months correlation between Nucor and Hudbay is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Nucor Corp and Hudbay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudbay Minerals 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 Hudbay Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudbay Minerals has no effect on the direction of Nucor Corp i.e., Nucor Corp and Hudbay Minerals go up and down completely randomly.

Pair Corralation between Nucor Corp and Hudbay Minerals

Considering the 90-day investment horizon Nucor Corp is expected to under-perform the Hudbay Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Nucor Corp is 1.51 times less risky than Hudbay Minerals. The stock trades about -0.69 of its potential returns per unit of risk. The Hudbay Minerals is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  894.00  in Hudbay Minerals on September 30, 2024 and sell it today you would lose (74.00) from holding Hudbay Minerals or give up 8.28% of portfolio value over 90 days.

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

Nucor Corp  vs.  Hudbay Minerals

Nucor Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nucor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hudbay Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hudbay Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Nucor Corp and Hudbay Minerals

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

The idea behind Nucor Corp and Hudbay Minerals 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 CEOs Directory module to screen CEOs from public companies around the world.