Correlation Between Revolve Group and ArcelorMittal

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

By analyzing existing cross correlation between Revolve Group LLC and ArcelorMittal SA ADR, you can compare the effects of market volatilities on Revolve Group and ArcelorMittal 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 Revolve Group with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Revolve Group and ArcelorMittal.

Diversification Opportunities for Revolve Group and ArcelorMittal

0.05

Correlation Coefficient

Revolve Group  ArcelorMittal

Significant diversification

The 3 months correlation between Revolve and ArcelorMittal is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Revolve Group LLC and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR and Revolve Group 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 Revolve Group LLC are associated (or correlated) with ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA ADR has no effect on the direction of Revolve Group i.e., Revolve Group and ArcelorMittal go up and down completely randomly.

Pair Corralation between Revolve Group and ArcelorMittal

Given the investment horizon of 90 days Revolve Group LLC is expected to generate 2.25 times more return on investment than ArcelorMittal. However, Revolve Group is 2.25 times more volatile than ArcelorMittal SA ADR. It trades about -0.11 of its potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about -0.5 per unit of risk. If you would invest  3,617  in Revolve Group LLC on October 6, 2024 and sell it today you would lose (261.00) from holding Revolve Group LLC or give up 7.22% of portfolio value over 90 days.

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

Revolve Group LLC  vs.  ArcelorMittal SA ADR

Revolve Group LLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Revolve Group LLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Revolve Group showed solid returns over the last few months and may actually be approaching a breakup point.

ArcelorMittal SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ArcelorMittal SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Revolve Group and ArcelorMittal

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

The idea behind Revolve Group LLC and ArcelorMittal SA ADR 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.