Correlation Between Lifeway Foods and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods 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 Lifeway Foods and Olympic Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Olympic Steel, you can compare the effects of market volatilities on Lifeway Foods 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 Lifeway Foods with a short position of Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Olympic Steel.
Diversification Opportunities for Lifeway Foods and Olympic Steel
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lifeway and Olympic is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and Lifeway Foods 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 Lifeway Foods 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 Lifeway Foods i.e., Lifeway Foods and Olympic Steel go up and down completely randomly.
Pair Corralation between Lifeway Foods and Olympic Steel
Assuming the 90 days horizon Lifeway Foods is expected to generate 1.88 times more return on investment than Olympic Steel. However, Lifeway Foods is 1.88 times more volatile than Olympic Steel. It trades about 0.08 of its potential returns per unit of risk. Olympic Steel is currently generating about 0.0 per unit of risk. If you would invest 496.00 in Lifeway Foods on October 18, 2024 and sell it today you would earn a total of 1,664 from holding Lifeway Foods or generate 335.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lifeway Foods vs. Olympic Steel
Performance |
| Timeline |
| Lifeway Foods |
| Olympic Steel |
Lifeway Foods and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Olympic Steel
The main advantage of trading using opposite Lifeway Foods and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods 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.| Lifeway Foods vs. Addus HomeCare | Lifeway Foods vs. Amkor Technology | Lifeway Foods vs. KENEDIX OFFICE INV | Lifeway Foods vs. DFS Furniture PLC |
| Olympic Steel vs. Chunghwa Telecom Co | Olympic Steel vs. Canon Marketing Japan | Olympic Steel vs. TRADELINK ELECTRON | Olympic Steel vs. Charter Communications |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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