Correlation Between ArcelorMittal and Worthington Steel

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

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

Diversification Opportunities for ArcelorMittal and Worthington Steel

-0.35

Correlation Coefficient

ArcelorMittal  Worthington Steel

Very good diversification

The 3 months correlation between ArcelorMittal and Worthington is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel and ArcelorMittal 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 ArcelorMittal SA ADR are associated (or correlated) with Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Worthington Steel go up and down completely randomly.

Pair Corralation between ArcelorMittal and Worthington Steel

Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to generate 1.34 times more return on investment than Worthington Steel. However, ArcelorMittal is 1.34 times more volatile than Worthington Steel. It trades about 0.08 of its potential returns per unit of risk. Worthington Steel is currently generating about -0.11 per unit of risk. If you would invest  2,326  in ArcelorMittal SA ADR on January 17, 2025 and sell it today you would earn a total of  366.00  from holding ArcelorMittal SA ADR or generate 15.74% return on investment over 90 days.

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

ArcelorMittal SA ADR  vs.  Worthington Steel

ArcelorMittal SA ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal SA ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, ArcelorMittal unveiled solid returns over the last few months and may actually be approaching a breakup point.

Worthington Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Worthington Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ArcelorMittal and Worthington Steel

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

The idea behind ArcelorMittal SA ADR and Worthington Steel 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..