Correlation Between Steel Dynamics and Rbc Bluebay

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

By analyzing existing cross correlation between Steel Dynamics and Rbc Bluebay Core, you can compare the effects of market volatilities on Steel Dynamics and Rbc Bluebay 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 Rbc Bluebay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Rbc Bluebay.

Diversification Opportunities for Steel Dynamics and Rbc Bluebay

-0.69

Correlation Coefficient

Steel Dynamics  Rbc Bluebay

Excellent diversification

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

Pair Corralation between Steel Dynamics and Rbc Bluebay

Given the investment horizon of 90 days Steel Dynamics is expected to generate 7.66 times more return on investment than Rbc Bluebay. However, Steel Dynamics is 7.66 times more volatile than Rbc Bluebay Core. It trades about 0.14 of its potential returns per unit of risk. Rbc Bluebay Core is currently generating about -0.03 per unit of risk. If you would invest  11,014  in Steel Dynamics on September 12, 2024 and sell it today you would earn a total of  2,515  from holding Steel Dynamics or generate 22.83% return on investment over 90 days.

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

Steel Dynamics  vs.  Rbc Bluebay Core

Steel Dynamics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Dynamics are ranked lower than 11 (%) 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.

Rbc Bluebay Core

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rbc Bluebay Core has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Rbc Bluebay 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 Rbc Bluebay

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

The idea behind Steel Dynamics and Rbc Bluebay Core 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.