Correlation Between ALGOMA STEEL and Brixmor Property

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

By analyzing existing cross correlation between ALGOMA STEEL GROUP and Brixmor Property Group, you can compare the effects of market volatilities on ALGOMA STEEL and Brixmor Property 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 ALGOMA STEEL with a short position of Brixmor Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and Brixmor Property.

Diversification Opportunities for ALGOMA STEEL and Brixmor Property

0.7

Correlation Coefficient

ALGOMA STEEL  Brixmor Property

Poor diversification

The 3 months correlation between ALGOMA and Brixmor is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and Brixmor Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brixmor Property and ALGOMA 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 ALGOMA STEEL GROUP are associated (or correlated) with Brixmor Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brixmor Property has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and Brixmor Property go up and down completely randomly.

Pair Corralation between ALGOMA STEEL and Brixmor Property

Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to generate 1.96 times more return on investment than Brixmor Property. However, ALGOMA STEEL is 1.96 times more volatile than Brixmor Property Group. It trades about 0.12 of its potential returns per unit of risk. Brixmor Property Group is currently generating about 0.15 per unit of risk. If you would invest  628.00  in ALGOMA STEEL GROUP on September 27, 2024 and sell it today you would earn a total of  267.00  from holding ALGOMA STEEL GROUP or generate 42.52% return on investment over 90 days.

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

ALGOMA STEEL GROUP  vs.  Brixmor Property Group

ALGOMA STEEL GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

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

Brixmor Property

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brixmor Property Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Brixmor Property may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ALGOMA STEEL and Brixmor Property

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

The idea behind ALGOMA STEEL GROUP and Brixmor Property 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.