Correlation Between Steel Dynamics and Loomis AB

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

By analyzing existing cross correlation between Steel Dynamics and Loomis AB ser, you can compare the effects of market volatilities on Steel Dynamics and Loomis AB 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 Loomis AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Loomis AB.

Diversification Opportunities for Steel Dynamics and Loomis AB

0.7

Correlation Coefficient

Steel Dynamics  Loomis AB

Poor diversification

The 3 months correlation between Steel and Loomis is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Loomis AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis AB ser 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 Loomis AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis AB ser has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Loomis AB go up and down completely randomly.

Pair Corralation between Steel Dynamics and Loomis AB

Given the investment horizon of 90 days Steel Dynamics is expected to generate 2.06 times less return on investment than Loomis AB. In addition to that, Steel Dynamics is 1.08 times more volatile than Loomis AB ser. It trades about 0.08 of its total potential returns per unit of risk. Loomis AB ser is currently generating about 0.17 per unit of volatility. If you would invest  33,640  in Loomis AB ser on December 30, 2024 and sell it today you would earn a total of  7,660  from holding Loomis AB ser or generate 22.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Steel Dynamics  vs.  Loomis AB ser

Steel Dynamics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Dynamics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Steel Dynamics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Loomis AB ser

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Loomis AB ser are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Loomis AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Steel Dynamics and Loomis AB

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

The idea behind Steel Dynamics and Loomis AB ser 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.