Correlation Between Cleveland Cliffs and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Cleveland Cliffs and ArcelorMittal 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 Cleveland Cliffs and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cleveland Cliffs and ArcelorMittal SA ADR, you can compare the effects of market volatilities on Cleveland Cliffs and ArcelorMittal 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 Cleveland Cliffs with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleveland Cliffs and ArcelorMittal.
Diversification Opportunities for Cleveland Cliffs and ArcelorMittal
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cleveland and ArcelorMittal is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cleveland Cliffs and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR and Cleveland Cliffs 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 Cleveland Cliffs are associated (or correlated) with ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA ADR has no effect on the direction of Cleveland Cliffs i.e., Cleveland Cliffs and ArcelorMittal go up and down completely randomly.
Pair Corralation between Cleveland Cliffs and ArcelorMittal
Considering the 90-day investment horizon Cleveland Cliffs is expected to under-perform the ArcelorMittal. In addition to that, Cleveland Cliffs is 1.36 times more volatile than ArcelorMittal SA ADR. It trades about 0.0 of its total potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about 0.0 per unit of volatility. If you would invest 2,873 in ArcelorMittal SA ADR on January 24, 2024 and sell it today you would lose (292.00) from holding ArcelorMittal SA ADR or give up 10.16% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Cleveland Cliffs vs. ArcelorMittal SA ADR
Performance |
Timeline |
Cleveland Cliffs |
ArcelorMittal SA ADR |
Cleveland Cliffs and ArcelorMittal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cleveland Cliffs and ArcelorMittal
The main advantage of trading using opposite Cleveland Cliffs and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleveland Cliffs position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.The idea behind Cleveland Cliffs and ArcelorMittal SA ADR 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.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
CEOs Directory Screen CEOs from public companies around the world | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |