Correlation Between Acco Brands and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both Acco Brands and Olympic 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 Acco Brands and Olympic Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acco Brands and Olympic Steel, you can compare the effects of market volatilities on Acco Brands and Olympic 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 Acco Brands with a short position of Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acco Brands and Olympic Steel.
Diversification Opportunities for Acco Brands and Olympic Steel
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Acco and Olympic is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and Acco Brands 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 Acco Brands are associated (or correlated) with Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of Acco Brands i.e., Acco Brands and Olympic Steel go up and down completely randomly.
Pair Corralation between Acco Brands and Olympic Steel
Given the investment horizon of 90 days Acco Brands is expected to generate 1.65 times less return on investment than Olympic Steel. But when comparing it to its historical volatility, Acco Brands is 1.18 times less risky than Olympic Steel. It trades about 0.02 of its potential returns per unit of risk. Olympic Steel is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,232 in Olympic Steel on August 30, 2024 and sell it today you would earn a total of 999.00 from holding Olympic Steel or generate 30.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acco Brands vs. Olympic Steel
Performance |
| Timeline |
| Acco Brands |
| Olympic Steel |
Acco Brands and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acco Brands and Olympic Steel
The main advantage of trading using opposite Acco Brands and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acco Brands position performs unexpectedly, Olympic 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 Olympic Steel will offset losses from the drop in Olympic Steel's long position.| Acco Brands vs. HNI Corp | Acco Brands vs. Steelcase | Acco Brands vs. Ennis Inc | Acco Brands vs. Acacia Research |
| Olympic Steel vs. Universal Stainless Alloy | Olympic Steel vs. Outokumpu Oyj ADR | Olympic Steel vs. Usinas Siderurgicas de | Olympic Steel vs. POSCO Holdings |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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