Correlation Between Steel Dynamics and Ultrabull Profund

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

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

Diversification Opportunities for Steel Dynamics and Ultrabull Profund

0.13

Correlation Coefficient

Steel Dynamics  Ultrabull Profund

Average diversification

The 3 months correlation between Steel and Ultrabull is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Ultrabull Profund Ultrabull in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrabull Profund 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 Ultrabull Profund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrabull Profund has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Ultrabull Profund go up and down completely randomly.

Pair Corralation between Steel Dynamics and Ultrabull Profund

Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.05 times more return on investment than Ultrabull Profund. However, Steel Dynamics is 1.05 times more volatile than Ultrabull Profund Ultrabull. It trades about 0.08 of its potential returns per unit of risk. Ultrabull Profund Ultrabull is currently generating about -0.1 per unit of risk. If you would invest  11,334  in Steel Dynamics on December 29, 2024 and sell it today you would earn a total of  1,063  from holding Steel Dynamics or generate 9.38% return on investment over 90 days.

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

Steel Dynamics  vs.  Ultrabull Profund Ultrabull

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.

Ultrabull Profund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultrabull Profund Ultrabull has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Steel Dynamics and Ultrabull Profund

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

The idea behind Steel Dynamics and Ultrabull Profund Ultrabull 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.