Correlation Between Wealthsimple Shariah and Steel Dynamics
Can any of the company-specific risk be diversified away by investing in both Wealthsimple Shariah and Steel Dynamics 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 Wealthsimple Shariah and Steel Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wealthsimple Shariah World and Steel Dynamics, you can compare the effects of market volatilities on Wealthsimple Shariah and Steel Dynamics 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 Wealthsimple Shariah with a short position of Steel Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wealthsimple Shariah and Steel Dynamics.
Diversification Opportunities for Wealthsimple Shariah and Steel Dynamics
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wealthsimple and Steel is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wealthsimple Shariah World and Steel Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Dynamics and Wealthsimple Shariah 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 Wealthsimple Shariah World are associated (or correlated) with Steel Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Dynamics has no effect on the direction of Wealthsimple Shariah i.e., Wealthsimple Shariah and Steel Dynamics go up and down completely randomly.
Pair Corralation between Wealthsimple Shariah and Steel Dynamics
Assuming the 90 days trading horizon Wealthsimple Shariah is expected to generate 6.16 times less return on investment than Steel Dynamics. But when comparing it to its historical volatility, Wealthsimple Shariah World is 2.82 times less risky than Steel Dynamics. It trades about 0.1 of its potential returns per unit of risk. Steel Dynamics is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 12,856 in Steel Dynamics on August 31, 2025 and sell it today you would earn a total of 3,927 from holding Steel Dynamics or generate 30.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wealthsimple Shariah World vs. Steel Dynamics
Performance |
| Timeline |
| Wealthsimple Shariah |
| Steel Dynamics |
Wealthsimple Shariah and Steel Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wealthsimple Shariah and Steel Dynamics
The main advantage of trading using opposite Wealthsimple Shariah and Steel Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wealthsimple Shariah position performs unexpectedly, Steel Dynamics 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 Steel Dynamics will offset losses from the drop in Steel Dynamics' long position.| Wealthsimple Shariah vs. Wealthsimple North America | Wealthsimple Shariah vs. Wealthsimple Developed Markets | Wealthsimple Shariah vs. Wealthsimple North American | Wealthsimple Shariah vs. NBI High Yield |
| Steel Dynamics vs. Wizz Air Holdings | Steel Dynamics vs. EvoAir Holdings | Steel Dynamics vs. Piedmont Office Realty | Steel Dynamics vs. 24SevenOffice Group AB |
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.
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