Correlation Between MARKET VECTR and Nucor

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

By analyzing existing cross correlation between MARKET VECTR RETAIL and Nucor, you can compare the effects of market volatilities on MARKET VECTR and Nucor 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 MARKET VECTR with a short position of Nucor. Check out your portfolio center. Please also check ongoing floating volatility patterns of MARKET VECTR and Nucor.

Diversification Opportunities for MARKET VECTR and Nucor

-0.31

Correlation Coefficient

MARKET VECTR  Nucor

Very good diversification

The 3 months correlation between MARKET and Nucor is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding MARKET VECTR RETAIL and Nucor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucor and MARKET VECTR 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 MARKET VECTR RETAIL are associated (or correlated) with Nucor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nucor has no effect on the direction of MARKET VECTR i.e., MARKET VECTR and Nucor go up and down completely randomly.

Pair Corralation between MARKET VECTR and Nucor

Assuming the 90 days trading horizon MARKET VECTR RETAIL is expected to generate 0.26 times more return on investment than Nucor. However, MARKET VECTR RETAIL is 3.84 times less risky than Nucor. It trades about 0.2 of its potential returns per unit of risk. Nucor is currently generating about -0.02 per unit of risk. If you would invest  20,140  in MARKET VECTR RETAIL on October 25, 2024 and sell it today you would earn a total of  2,280  from holding MARKET VECTR RETAIL or generate 11.32% return on investment over 90 days.

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

MARKET VECTR RETAIL  vs.  Nucor

MARKET VECTR RETAIL

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MARKET VECTR RETAIL are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, MARKET VECTR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nucor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nucor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Nucor is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MARKET VECTR and Nucor

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

The idea behind MARKET VECTR RETAIL and Nucor 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..