Correlation Between Steel Dynamics and Growth Income
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Growth Income 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 Growth Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Growth Income Fund, you can compare the effects of market volatilities on Steel Dynamics and Growth Income 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 Growth Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Growth Income.
Diversification Opportunities for Steel Dynamics and Growth Income
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Steel and GROWTH is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Growth Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Income 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 Growth Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Income has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Growth Income go up and down completely randomly.
Pair Corralation between Steel Dynamics and Growth Income
Given the investment horizon of 90 days Steel Dynamics is expected to under-perform the Growth Income. In addition to that, Steel Dynamics is 2.44 times more volatile than Growth Income Fund. It trades about -0.04 of its total potential returns per unit of risk. Growth Income Fund is currently generating about -0.04 per unit of volatility. If you would invest 3,516 in Growth Income Fund on December 1, 2024 and sell it today you would lose (77.00) from holding Growth Income Fund or give up 2.19% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Steel Dynamics vs. Growth Income Fund
Performance |
Timeline |
Steel Dynamics |
Growth Income |
Steel Dynamics and Growth Income Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Steel Dynamics and Growth Income
The main advantage of trading using opposite Steel Dynamics and Growth Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Growth Income 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 Growth Income will offset losses from the drop in Growth Income'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 |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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