Correlation Between Lam Research and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Lam Research 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 Lam Research and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lam Research Corp and ArcelorMittal SA ADR, you can compare the effects of market volatilities on Lam Research 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 Lam Research with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lam Research and ArcelorMittal.
Diversification Opportunities for Lam Research and ArcelorMittal
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lam and ArcelorMittal is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lam Research Corp 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 Lam Research 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 Lam Research Corp 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 Lam Research i.e., Lam Research and ArcelorMittal go up and down completely randomly.
Pair Corralation between Lam Research and ArcelorMittal
Given the investment horizon of 90 days Lam Research Corp is expected to under-perform the ArcelorMittal. In addition to that, Lam Research is 1.01 times more volatile than ArcelorMittal SA ADR. It trades about -0.21 of its total potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about -0.16 per unit of volatility. If you would invest 2,701 in ArcelorMittal SA ADR on January 26, 2024 and sell it today you would lose (181.00) from holding ArcelorMittal SA ADR or give up 6.7% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Lam Research Corp vs. ArcelorMittal SA ADR
Performance |
Timeline |
Lam Research Corp |
ArcelorMittal SA ADR |
Lam Research and ArcelorMittal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lam Research and ArcelorMittal
The main advantage of trading using opposite Lam Research and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lam Research 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.Lam Research vs. KLA Tencor | Lam Research vs. Teradyne | Lam Research vs. Applied Materials | Lam Research vs. Aehr Test Systems |
ArcelorMittal vs. Cleveland Cliffs | ArcelorMittal vs. Reliance Steel Aluminum | ArcelorMittal vs. Ternium SA ADR |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |