Correlation Between Labrador Iron and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Labrador Iron and Algoma 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 Labrador Iron and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Labrador Iron Ore and Algoma Steel Group, you can compare the effects of market volatilities on Labrador Iron and Algoma 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 Labrador Iron with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labrador Iron and Algoma Steel.
Diversification Opportunities for Labrador Iron and Algoma Steel
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Labrador and Algoma is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Iron Ore and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group and Labrador Iron 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 Labrador Iron Ore are associated (or correlated) with Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of Labrador Iron i.e., Labrador Iron and Algoma Steel go up and down completely randomly.
Pair Corralation between Labrador Iron and Algoma Steel
Assuming the 90 days trading horizon Labrador Iron Ore is expected to generate 0.36 times more return on investment than Algoma Steel. However, Labrador Iron Ore is 2.75 times less risky than Algoma Steel. It trades about -0.01 of its potential returns per unit of risk. Algoma Steel Group is currently generating about -0.05 per unit of risk. If you would invest 2,908 in Labrador Iron Ore on June 13, 2025 and sell it today you would lose (101.00) from holding Labrador Iron Ore or give up 3.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Labrador Iron Ore vs. Algoma Steel Group
Performance |
| Timeline |
| Labrador Iron Ore |
| Algoma Steel Group |
Labrador Iron and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Labrador Iron and Algoma Steel
The main advantage of trading using opposite Labrador Iron and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labrador Iron position performs unexpectedly, Algoma 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.| Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
| Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Champion Iron | Algoma Steel vs. Labrador Iron Ore | Algoma Steel vs. Tree Island Steel |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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