Correlation Between Steel Dynamics and Arlington Asset
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Arlington Asset 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 Steel Dynamics and Arlington Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Arlington Asset Investment, you can compare the effects of market volatilities on Steel Dynamics and Arlington Asset 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 Steel Dynamics with a short position of Arlington Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Arlington Asset.
Diversification Opportunities for Steel Dynamics and Arlington Asset
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and Arlington is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Arlington Asset Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arlington Asset Inve and Steel Dynamics 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 Steel Dynamics are associated (or correlated) with Arlington Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arlington Asset Inve has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Arlington Asset go up and down completely randomly.
Pair Corralation between Steel Dynamics and Arlington Asset
If you would invest 11,034 in Steel Dynamics on September 9, 2024 and sell it today you would earn a total of 2,656 from holding Steel Dynamics or generate 24.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 1.54% |
Values | Daily Returns |
Steel Dynamics vs. Arlington Asset Investment
Performance |
Timeline |
Steel Dynamics |
Arlington Asset Inve |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Steel Dynamics and Arlington Asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Steel Dynamics and Arlington Asset
The main advantage of trading using opposite Steel Dynamics and Arlington Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Arlington Asset 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 Arlington Asset will offset losses from the drop in Arlington Asset's long position.Steel Dynamics vs. Cleveland Cliffs | Steel Dynamics vs. United States Steel | Steel Dynamics vs. ArcelorMittal SA ADR | Steel Dynamics vs. Reliance Steel Aluminum |
Arlington Asset vs. ACRES Commercial Realty | Arlington Asset vs. ACRES Commercial Realty | Arlington Asset vs. Cherry Hill Mortgage | Arlington Asset vs. Nexpoint Real Estate |
Check out your portfolio center.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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data |