Correlation Between Worthington Steel and CONSTELLATION

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

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

Diversification Opportunities for Worthington Steel and CONSTELLATION

0.41

Correlation Coefficient

Worthington Steel  CONSTELLATION

Very weak diversification

The 3 months correlation between Worthington and CONSTELLATION is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Steel and CONSTELLATION ENERGY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSTELLATION ENERGY 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 CONSTELLATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSTELLATION ENERGY has no effect on the direction of Worthington Steel i.e., Worthington Steel and CONSTELLATION go up and down completely randomly.

Pair Corralation between Worthington Steel and CONSTELLATION

Allowing for the 90-day total investment horizon Worthington Steel is expected to under-perform the CONSTELLATION. In addition to that, Worthington Steel is 2.73 times more volatile than CONSTELLATION ENERGY GROUP. It trades about -0.21 of its total potential returns per unit of risk. CONSTELLATION ENERGY GROUP is currently generating about -0.21 per unit of volatility. If you would invest  11,250  in CONSTELLATION ENERGY GROUP on October 25, 2024 and sell it today you would lose (304.00) from holding CONSTELLATION ENERGY GROUP or give up 2.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.47%
Values	Daily Returns

Worthington Steel  vs.  CONSTELLATION ENERGY GROUP

Worthington Steel

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CONSTELLATION ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTELLATION ENERGY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CONSTELLATION ENERGY GROUP investors.

Pair Trading with Worthington Steel and CONSTELLATION

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

The idea behind Worthington Steel and CONSTELLATION ENERGY GROUP 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.