Correlation Between Nucor Corp and TMST Old

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

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

Diversification Opportunities for Nucor Corp and TMST Old

0.0

Correlation Coefficient

Nucor Corp  TMST Old

Pay attention - limited upside

The 3 months correlation between Nucor and TMST is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nucor Corp and TMST Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMST Old 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 TMST Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMST Old has no effect on the direction of Nucor Corp i.e., Nucor Corp and TMST Old go up and down completely randomly.

Pair Corralation between Nucor Corp and TMST Old

If you would invest  15,137  in Nucor Corp on August 30, 2024 and sell it today you would earn a total of  340.00  from holding Nucor Corp or generate 2.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Nucor Corp  vs.  TMST Old

Nucor Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nucor Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Nucor Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

TMST Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMST Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TMST Old is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nucor Corp and TMST Old

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

The idea behind Nucor Corp and TMST Old 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..