Correlation Between Worthington Industries and Thyssenkrupp

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

By analyzing existing cross correlation between Worthington Industries and Thyssenkrupp AG ON, you can compare the effects of market volatilities on Worthington Industries and Thyssenkrupp 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 Industries with a short position of Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worthington Industries and Thyssenkrupp.

Diversification Opportunities for Worthington Industries and Thyssenkrupp

-0.13

Correlation Coefficient

Worthington Industries  Thyssenkrupp

Good diversification

The 3 months correlation between Worthington and Thyssenkrupp is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Industries and Thyssenkrupp AG ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thyssenkrupp AG ON and Worthington Industries 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 Industries are associated (or correlated) with Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thyssenkrupp AG ON has no effect on the direction of Worthington Industries i.e., Worthington Industries and Thyssenkrupp go up and down completely randomly.

Pair Corralation between Worthington Industries and Thyssenkrupp

Considering the 90-day investment horizon Worthington Industries is expected to under-perform the Thyssenkrupp. But the stock apears to be less risky and, when comparing its historical volatility, Worthington Industries is 1.94 times less risky than Thyssenkrupp. The stock trades about -0.11 of its potential returns per unit of risk. The Thyssenkrupp AG ON is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  358.00  in Thyssenkrupp AG ON on September 20, 2024 and sell it today you would earn a total of  92.00  from holding Thyssenkrupp AG ON or generate 25.7% return on investment over 90 days.

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

Worthington Industries  vs.  Thyssenkrupp AG ON

Worthington Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worthington Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Thyssenkrupp AG ON

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thyssenkrupp AG ON are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, Thyssenkrupp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Worthington Industries and Thyssenkrupp

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

The idea behind Worthington Industries and Thyssenkrupp AG ON 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.