Correlation Between Steel Dynamics and AIM ETF
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and AIM ETF 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 AIM ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and AIM ETF Products, you can compare the effects of market volatilities on Steel Dynamics and AIM ETF 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 AIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and AIM ETF.
Diversification Opportunities for Steel Dynamics and AIM ETF
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Steel and AIM is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and AIM ETF Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ETF Products 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 AIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ETF Products has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and AIM ETF go up and down completely randomly.
Pair Corralation between Steel Dynamics and AIM ETF
Given the investment horizon of 90 days Steel Dynamics is expected to generate 7.96 times more return on investment than AIM ETF. However, Steel Dynamics is 7.96 times more volatile than AIM ETF Products. It trades about 0.17 of its potential returns per unit of risk. AIM ETF Products is currently generating about 0.23 per unit of risk. If you would invest 11,091 in Steel Dynamics on September 5, 2024 and sell it today you would earn a total of 3,229 from holding Steel Dynamics or generate 29.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Steel Dynamics vs. AIM ETF Products
Performance |
Timeline |
Steel Dynamics |
AIM ETF Products |
Steel Dynamics and AIM ETF Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Steel Dynamics and AIM ETF
The main advantage of trading using opposite Steel Dynamics and AIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, AIM ETF 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 AIM ETF will offset losses from the drop in AIM ETF'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 |
AIM ETF vs. AIM ETF Products | AIM ETF vs. AIM ETF Products | AIM ETF vs. AIM ETF Products | AIM ETF vs. AllianzIM Large Cap |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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