Correlation Between Steel Dynamics and IMGP DBi
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and IMGP DBi 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 IMGP DBi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and iMGP DBi Managed, you can compare the effects of market volatilities on Steel Dynamics and IMGP DBi 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 IMGP DBi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and IMGP DBi.
Diversification Opportunities for Steel Dynamics and IMGP DBi
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Steel and IMGP is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and iMGP DBi Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iMGP DBi Managed 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 IMGP DBi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iMGP DBi Managed has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and IMGP DBi go up and down completely randomly.
Pair Corralation between Steel Dynamics and IMGP DBi
Given the investment horizon of 90 days Steel Dynamics is expected to under-perform the IMGP DBi. In addition to that, Steel Dynamics is 3.76 times more volatile than iMGP DBi Managed. It trades about -0.04 of its total potential returns per unit of risk. iMGP DBi Managed is currently generating about -0.07 per unit of volatility. If you would invest 2,647 in iMGP DBi Managed on December 2, 2024 and sell it today you would lose (61.00) from holding iMGP DBi Managed or give up 2.3% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Steel Dynamics vs. iMGP DBi Managed
Performance |
Timeline |
Steel Dynamics |
iMGP DBi Managed |
Steel Dynamics and IMGP DBi Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Steel Dynamics and IMGP DBi
The main advantage of trading using opposite Steel Dynamics and IMGP DBi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, IMGP DBi 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 IMGP DBi will offset losses from the drop in IMGP DBi'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 |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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