Correlation Between Reliance Steel and I 80

Can any of the company-specific risk be diversified away by investing in both Reliance Steel and I 80 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 Reliance Steel and I 80 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Reliance Steel Aluminum and I 80 Gold Corp, you can compare the effects of market volatilities on Reliance Steel and I 80 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 Reliance Steel with a short position of I 80. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Steel and I 80.

Diversification Opportunities for Reliance Steel and I 80

-0.69

Correlation Coefficient

Reliance Steel  I 80

Excellent diversification

The 3 months correlation between Reliance and IAUX is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and I 80 Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I 80 Gold and Reliance 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 Reliance Steel Aluminum are associated (or correlated) with I 80. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I 80 Gold has no effect on the direction of Reliance Steel i.e., Reliance Steel and I 80 go up and down completely randomly.

Pair Corralation between Reliance Steel and I 80

Allowing for the 90-day total investment horizon Reliance Steel Aluminum is expected to generate 0.06 times more return on investment than I 80. However, Reliance Steel Aluminum is 15.66 times less risky than I 80. It trades about -0.2 of its potential returns per unit of risk. I 80 Gold Corp is currently generating about -0.04 per unit of risk. If you would invest  32,206  in Reliance Steel Aluminum on September 12, 2024 and sell it today you would lose (1,425) from holding Reliance Steel Aluminum or give up 4.42% of portfolio value over 90 days.

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

Reliance Steel Aluminum  vs.  I 80 Gold Corp

Reliance Steel Aluminum

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Reliance Steel Aluminum are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Reliance Steel unveiled solid returns over the last few months and may actually be approaching a breakup point.

I 80 Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days I 80 Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Reliance Steel and I 80

The main advantage of trading using opposite Reliance Steel and I 80 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Steel position performs unexpectedly, I 80 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 I 80 will offset losses from the drop in I 80's long position.

The idea behind Reliance Steel Aluminum and I 80 Gold Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.