Correlation Between Ryerson Holding and Proto Labs

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

By analyzing existing cross correlation between Ryerson Holding Corp and Proto Labs, you can compare the effects of market volatilities on Ryerson Holding and Proto Labs 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 Ryerson Holding with a short position of Proto Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryerson Holding and Proto Labs.

Diversification Opportunities for Ryerson Holding and Proto Labs

0.15

Correlation Coefficient

Ryerson Holding  Proto Labs

Average diversification

The 3 months correlation between Ryerson and Proto is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ryerson Holding Corp and Proto Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proto Labs and Ryerson Holding 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 Ryerson Holding Corp are associated (or correlated) with Proto Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proto Labs has no effect on the direction of Ryerson Holding i.e., Ryerson Holding and Proto Labs go up and down completely randomly.

Pair Corralation between Ryerson Holding and Proto Labs

Considering the 90-day investment horizon Ryerson Holding Corp is expected to generate 1.32 times more return on investment than Proto Labs. However, Ryerson Holding is 1.32 times more volatile than Proto Labs. It trades about 0.16 of its potential returns per unit of risk. Proto Labs is currently generating about -0.07 per unit of risk. If you would invest  1,939  in Ryerson Holding Corp on December 20, 2024 and sell it today you would earn a total of  521.00  from holding Ryerson Holding Corp or generate 26.87% return on investment over 90 days.

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

Ryerson Holding Corp  vs.  Proto Labs

Ryerson Holding Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ryerson Holding Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Ryerson Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Proto Labs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Proto Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ryerson Holding and Proto Labs

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

The idea behind Ryerson Holding Corp and Proto Labs 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..