Correlation Between Nature Wood and United States

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

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

Diversification Opportunities for Nature Wood and United States

-0.02

Correlation Coefficient

Nature Wood  United States

Good diversification

The 3 months correlation between Nature and United is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nature Wood Group and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and Nature Wood 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 Nature Wood Group are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Nature Wood i.e., Nature Wood and United States go up and down completely randomly.

Pair Corralation between Nature Wood and United States

Given the investment horizon of 90 days Nature Wood Group is expected to under-perform the United States. In addition to that, Nature Wood is 1.02 times more volatile than United States Steel. It trades about -0.03 of its total potential returns per unit of risk. United States Steel is currently generating about 0.05 per unit of volatility. If you would invest  3,786  in United States Steel on August 30, 2024 and sell it today you would earn a total of  259.00  from holding United States Steel or generate 6.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Nature Wood Group  vs.  United States Steel

Nature Wood Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nature Wood Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Nature Wood is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

United States Steel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, United States may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Nature Wood and United States

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

The idea behind Nature Wood Group and United States 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.