Correlation Between Worthington Steel and Chart Industries

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

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

Diversification Opportunities for Worthington Steel and Chart Industries

0.45

Correlation Coefficient

Worthington Steel  Chart Industries

Very weak diversification

The 3 months correlation between Worthington and Chart is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Steel and Chart Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chart Industries and Worthington Steel 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 Worthington Steel are associated (or correlated) with Chart Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chart Industries has no effect on the direction of Worthington Steel i.e., Worthington Steel and Chart Industries go up and down completely randomly.

Pair Corralation between Worthington Steel and Chart Industries

Allowing for the 90-day total investment horizon Worthington Steel is expected to under-perform the Chart Industries. But the stock apears to be less risky and, when comparing its historical volatility, Worthington Steel is 1.22 times less risky than Chart Industries. The stock trades about -0.11 of its potential returns per unit of risk. The Chart Industries is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  6,913  in Chart Industries on December 22, 2024 and sell it today you would lose (1,042) from holding Chart Industries or give up 15.07% of portfolio value over 90 days.

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

Worthington Steel  vs.  Chart Industries

Worthington Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Worthington Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Chart Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chart Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Preferred Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Worthington Steel and Chart Industries

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

The idea behind Worthington Steel and Chart Industries 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.