Correlation Between Steel Dynamics and Oakmark International

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

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

Diversification Opportunities for Steel Dynamics and Oakmark International

0.41

Correlation Coefficient

Steel Dynamics  Oakmark International

Very weak diversification

The 3 months correlation between Steel and Oakmark is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Oakmark International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark International 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 Oakmark International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark International has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Oakmark International go up and down completely randomly.

Pair Corralation between Steel Dynamics and Oakmark International

Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.01 times less return on investment than Oakmark International. In addition to that, Steel Dynamics is 2.05 times more volatile than Oakmark International Small. It trades about 0.08 of its total potential returns per unit of risk. Oakmark International Small is currently generating about 0.16 per unit of volatility. If you would invest  1,776  in Oakmark International Small on December 29, 2024 and sell it today you would earn a total of  189.00  from holding Oakmark International Small or generate 10.64% return on investment over 90 days.

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

Steel Dynamics  vs.  Oakmark International Small

Steel Dynamics

Risk-Adjusted Performance

OK

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.

Oakmark International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark International Small are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Oakmark International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Steel Dynamics and Oakmark International

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

The idea behind Steel Dynamics and Oakmark International Small 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.