Correlation Between Reliance Steel and Las Vegas

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

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

Diversification Opportunities for Reliance Steel and Las Vegas

0.5

Correlation Coefficient

Reliance Steel  Las Vegas

Very weak diversification

The 3 months correlation between Reliance and Las is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands and Reliance Steel 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 Reliance Steel Aluminum are associated (or correlated) with Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Reliance Steel i.e., Reliance Steel and Las Vegas go up and down completely randomly.

Pair Corralation between Reliance Steel and Las Vegas

Assuming the 90 days horizon Reliance Steel Aluminum is expected to under-perform the Las Vegas. But the stock apears to be less risky and, when comparing its historical volatility, Reliance Steel Aluminum is 1.3 times less risky than Las Vegas. The stock trades about -0.48 of its potential returns per unit of risk. The Las Vegas Sands is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4,759  in Las Vegas Sands on September 22, 2024 and sell it today you would earn a total of  227.00  from holding Las Vegas Sands or generate 4.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Reliance Steel Aluminum  vs.  Las Vegas Sands

Reliance Steel Aluminum

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Reliance Steel Aluminum are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Reliance Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Las Vegas Sands

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Las Vegas Sands are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Las Vegas reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reliance Steel and Las Vegas

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

The idea behind Reliance Steel Aluminum and Las Vegas Sands 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.