Correlation Between Reliance Steel and Salomon A
Can any of the company-specific risk be diversified away by investing in both Reliance Steel and Salomon A 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 Salomon A 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 Salomon A Angel, you can compare the effects of market volatilities on Reliance Steel and Salomon A 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 Salomon A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Steel and Salomon A.
Diversification Opportunities for Reliance Steel and Salomon A
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reliance and Salomon is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and Salomon A Angel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salomon A Angel 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 Salomon A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salomon A Angel has no effect on the direction of Reliance Steel i.e., Reliance Steel and Salomon A go up and down completely randomly.
Pair Corralation between Reliance Steel and Salomon A
Allowing for the 90-day total investment horizon Reliance Steel Aluminum is expected to under-perform the Salomon A. But the stock apears to be less risky and, when comparing its historical volatility, Reliance Steel Aluminum is 2.09 times less risky than Salomon A. The stock trades about -0.1 of its potential returns per unit of risk. The Salomon A Angel is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 370,000 in Salomon A Angel on January 20, 2024 and sell it today you would earn a total of 2,500 from holding Salomon A Angel or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
Reliance Steel Aluminum vs. Salomon A Angel
Performance |
| Timeline |
| Reliance Steel Aluminum |
| Salomon A Angel |
Reliance Steel and Salomon A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Steel and Salomon A
The main advantage of trading using opposite Reliance Steel and Salomon A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Steel position performs unexpectedly, Salomon A 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 Salomon A will offset losses from the drop in Salomon A's long position.| Reliance Steel vs. Universal Stainless Alloy | Reliance Steel vs. Outokumpu Oyj ADR | Reliance Steel vs. Olympic Steel | Reliance Steel vs. POSCO Holdings |
| Salomon A vs. Delek Automotive Systems | Salomon A vs. Globrands Group | Salomon A vs. Ram On Investments and | Salomon A vs. Scope Metals Group |
Check out your portfolio center.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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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