Basic Materials · Steel · Completed evidence
STLD relative to NUE
Steel Dynamics Inc is the relatively depressed leg. Nucor Corp is the relatively extended leg.
Specific pair strategy
What is the play in STLD / NUE?
This is a relative trade. The result depends on which security performs better, not on whether the whole market rises or falls.
No pair trade
Do not pair long STLD with short NUE yet
The earlier relationship is not dependable enough to use the old gap as a trading reference. A large separation can persist when the businesses or their market drivers have changed.
This is the relatively depressed leg. The case needs it to recover or at least hold up better than the other leg.
This is the relatively extended leg. The case needs it to lag or weaken relative to the long leg.
A favourable relative move means STLD rises more than NUE, falls less than NUE, or rises while NUE falls. If NUE outperforms STLD, the pair moves against the case.
Reconsider the pair only after a later publication shows that the relationship has stabilised, break risk has fallen and the completed daily gap is moving back toward normal.
Until those conditions return, neither leg is a relative-value trade from this research.
The pair remains unusable while break risk is high or the earlier co-movement has not returned.
Stand aside until stability, co-movement and repeated mean crossings rebuild across completed observations.
Evidence now
- NUE Market Dynamics is weakening.
What would invalidate it?
A broken relationship can keep widening without the convergence behaviour seen in the earlier sample.
Possible setup paths
How the relative-value idea could be expressed
These are research structures, not recommendations or position-size instructions. The current course above determines whether any structure is ready to study now.
Long STLD / short NUE
Treat both legs as one relative position. The setup looks for STLD to outperform NUE; STLD can rise faster, fall less, or rise while NUE falls. The pair loses ground when NUE outperforms STLD.
When it becomes relevantThis is a structure to study only after the current course changes from “Stand aside” to confirmed convergence. Reconsider only after the pair rebuilds stable co-movement, repeated centre crossings and lower break risk.Principal riskRequires a live review of both legs, borrow availability and cost, event dates, liquidity and the research normalisation.Study STLD alone if its own evidence confirms
This simpler expression focuses on recovery in STLD. It avoids short-borrow mechanics, but it no longer isolates relative value: the result is exposed to the broad market, the sector and STLD-specific news.
When it becomes relevantA stronger case needs improving STLD price structure and supporting evidence, not just a wide relationship gap.Principal riskCarries full single-security and broad-market direction risk.Study NUE alone if its support continues to weaken
This expression focuses on weakness in NUE. It may fit a leader-rollover case, but it also abandons the relative hedge and adds direct market direction, squeeze and company-event risk.
When it becomes relevantWeakening in NUE must be visible in its own completed evidence; relative extension alone is not enough.Principal riskShort selling can involve unlimited loss, borrow fees, recalls and forced close-outs.Any practical expression needs an independent review of suitability, portfolio risk, liquidity, current news and earnings, borrow availability and cost, transaction costs and tax.
Relationship gap · technical name: standardised residual
How far apart are they compared with normal?
Zero is the pair's historical centre. The outer guides show increasingly unusual departures from it.
This is the relationship gap after allowing for the pair's usual co-movement. Zero is its historical centre; the distance is measured in standard deviations, so different pairs can be compared on the same scale.
The latest gap is 1.26 standard deviations from normal. STLD is the relatively depressed leg and NUE is the relatively extended leg. That is unusual separation, not proof that either security is cheap or expensive.
A move toward zero means convergence. A move farther from zero means the separation is extending and raises the risk that the old relationship is changing.
Common-base price paths
Which security created the gap?
Both paths begin at 100 so their relative movement is visible without mixing different share prices.
Both securities are reset to 100 at the first date. This removes the distraction of different share prices and shows how their completed weekly price paths diverged. It is not a valuation chart.
Since the common starting point, NUE is +69.3% and STLD is +161.4%. The chart shows which price path contributed to the separation; the fitted relationship measure is more precise than the raw visual distance.
For convergence, watch for STLD to catch up, NUE to lose ground, or both. The relationship can close even if both securities rise or both fall.
NUESTLD
Completed daily timing
Is the gap closing yet?
The daily relationship adds timing context inside the slower weekly case. It does not replace the weekly validity checks.
This applies the same relationship to completed daily bars. It is the timing layer inside the weekly case, not a separate trading signal.
Gap extending: The completed daily gap is still widening. The weekly separation may be interesting, but timing has not confirmed a turn.
The first useful change would be for the daily line to stop extending and begin moving back toward zero.
STLD · Steel Dynamics Inc
73/100 evidence score- Market Dynamics
- -0.29 · change -0.29
- Trend
- Positive
- Stage
- Stage 2 · Advancing
- Smart Money
- Cautious
- News sentiment
- Positive
- Options
- Mixed
NUE · Nucor Corp
78/100 evidence score- Market Dynamics
- 0.02 · change -0.119
- Trend
- Positive
- Stage
- Stage 2 · Advancing
- Smart Money
- Cautious
- Short interest
- Neutral
- Options
- Bullish
Relationship diagnostics
Why this pair is on the map
How closely completed weekly returns moved together across the measurement window.
How consistent the fitted relationship remained across earlier and later parts of the sample.
An observed mean-reversion clock, not a deadline or a forecast.
How often the residual crossed its historical centre; repeated crossings matter more than a single fit.
The latest residual's location inside its own completed history.
Stored price, volume and size context only. It does not include a live short locate or cost.
1 of 2 non-overlapping historical separations resolved after the relationship was fitted on earlier data.
Median time to return near the earlier fitted centre among the held-out cases that resolved.
The largest further move recorded after a measured held-out separation, before resolution or the observation window ended.
State history
What changed and when
Daily timing changed
Completed daily timing changed to gap extending through 2026-08-17.
Relationship discovered
Published as Relationship breakdown after the completed 2026-08-14 observation.
Same-industry map