Correlation Between Steel Dynamics and Cohen Steers

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

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

Diversification Opportunities for Steel Dynamics and Cohen Steers

0.22

Correlation Coefficient

Steel Dynamics  Cohen Steers

Modest diversification

The 3 months correlation between Steel and Cohen is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Cohen Steers Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Low 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 Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Low has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Cohen Steers go up and down completely randomly.

Pair Corralation between Steel Dynamics and Cohen Steers

Given the investment horizon of 90 days Steel Dynamics is expected to generate 15.06 times more return on investment than Cohen Steers. However, Steel Dynamics is 15.06 times more volatile than Cohen Steers Low. It trades about 0.14 of its potential returns per unit of risk. Cohen Steers Low is currently generating about 0.08 per unit of risk. If you would invest  12,820  in Steel Dynamics on December 2, 2024 and sell it today you would earn a total of  687.00  from holding Steel Dynamics or generate 5.36% return on investment over 90 days.

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

Steel Dynamics  vs.  Cohen Steers Low

Steel Dynamics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steel Dynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Steel Dynamics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Cohen Steers Low

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cohen Steers Low are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cohen Steers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Steel Dynamics and Cohen Steers

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

The idea behind Steel Dynamics and Cohen Steers Low 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..