Correlation Between Steel Dynamics and Harbor Diversified

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

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

Diversification Opportunities for Steel Dynamics and Harbor Diversified

-0.28

Correlation Coefficient

Steel Dynamics  Harbor Diversified

Very good diversification

The 3 months correlation between Steel and Harbor is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Harbor Diversified Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Diversified and Steel Dynamics 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 Steel Dynamics are associated (or correlated) with Harbor Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Diversified has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Harbor Diversified go up and down completely randomly.

Pair Corralation between Steel Dynamics and Harbor Diversified

Given the investment horizon of 90 days Steel Dynamics is expected to generate 4.21 times more return on investment than Harbor Diversified. However, Steel Dynamics is 4.21 times more volatile than Harbor Diversified International. It trades about 0.08 of its potential returns per unit of risk. Harbor Diversified International is currently generating about -0.09 per unit of risk. If you would invest  13,007  in Steel Dynamics on September 5, 2024 and sell it today you would earn a total of  1,131  from holding Steel Dynamics or generate 8.7% return on investment over 90 days.

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

Steel Dynamics  vs.  Harbor Diversified Internation

Steel Dynamics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Dynamics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Steel Dynamics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Harbor Diversified

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Diversified International are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Harbor Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Steel Dynamics and Harbor Diversified

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

The idea behind Steel Dynamics and Harbor Diversified International 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.