Correlation Between Reliance Steel and Moncler SpA

Can any of the company-specific risk be diversified away by investing in both Reliance Steel and Moncler SpA 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 Moncler SpA 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 Moncler SpA, you can compare the effects of market volatilities on Reliance Steel and Moncler SpA 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 Moncler SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Steel and Moncler SpA.

Diversification Opportunities for Reliance Steel and Moncler SpA

-0.67

Correlation Coefficient

Reliance Steel  Moncler SpA

Excellent diversification

The 3 months correlation between Reliance and Moncler is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and Moncler SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moncler SpA 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 Moncler SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moncler SpA has no effect on the direction of Reliance Steel i.e., Reliance Steel and Moncler SpA go up and down completely randomly.

Pair Corralation between Reliance Steel and Moncler SpA

Assuming the 90 days horizon Reliance Steel is expected to generate 2.21 times less return on investment than Moncler SpA. But when comparing it to its historical volatility, Reliance Steel Aluminum is 2.0 times less risky than Moncler SpA. It trades about 0.41 of its potential returns per unit of risk. Moncler SpA is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest  4,998  in Moncler SpA on October 22, 2024 and sell it today you would earn a total of  730.00  from holding Moncler SpA or generate 14.61% return on investment over 90 days.

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

Reliance Steel Aluminum  vs.  Moncler SpA

Reliance Steel Aluminum

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Reliance Steel Aluminum are ranked lower than 1 (%) 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.

Moncler SpA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Moncler SpA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Moncler SpA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Reliance Steel and Moncler SpA

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

The idea behind Reliance Steel Aluminum and Moncler SpA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.