Correlation Between United Guardian and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both United Guardian and ArcelorMittal 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 United Guardian and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Guardian and ArcelorMittal SA ADR, you can compare the effects of market volatilities on United Guardian and ArcelorMittal 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 United Guardian with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Guardian and ArcelorMittal.
Diversification Opportunities for United Guardian and ArcelorMittal
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and ArcelorMittal is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR and United Guardian 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 United Guardian are associated (or correlated) with ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA ADR has no effect on the direction of United Guardian i.e., United Guardian and ArcelorMittal go up and down completely randomly.
Pair Corralation between United Guardian and ArcelorMittal
Allowing for the 90-day total investment horizon United Guardian is expected to under-perform the ArcelorMittal. In addition to that, United Guardian is 1.8 times more volatile than ArcelorMittal SA ADR. It trades about -0.17 of its total potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about 0.0 per unit of volatility. If you would invest 2,356 in ArcelorMittal SA ADR on September 23, 2024 and sell it today you would lose (38.00) from holding ArcelorMittal SA ADR or give up 1.61% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
United Guardian vs. ArcelorMittal SA ADR
Performance |
Timeline |
United Guardian |
ArcelorMittal SA ADR |
United Guardian and ArcelorMittal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Guardian and ArcelorMittal
The main advantage of trading using opposite United Guardian and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Guardian position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.United Guardian vs. Utah Medical Products | United Guardian vs. Union Bankshares | United Guardian vs. Psychemedics | United Guardian vs. Unity Bancorp |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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