Correlation Between ArcelorMittal and Olin
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Olin 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 ArcelorMittal and Olin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ArcelorMittal SA ADR and Olin Corporation, you can compare the effects of market volatilities on ArcelorMittal and Olin 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 ArcelorMittal with a short position of Olin. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Olin.
Diversification Opportunities for ArcelorMittal and Olin
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ArcelorMittal and Olin is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Olin Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olin and ArcelorMittal 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 ArcelorMittal SA ADR are associated (or correlated) with Olin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olin has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Olin go up and down completely randomly.
Pair Corralation between ArcelorMittal and Olin
Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to generate 1.01 times more return on investment than Olin. However, ArcelorMittal is 1.01 times more volatile than Olin Corporation. It trades about 0.29 of its potential returns per unit of risk. Olin Corporation is currently generating about -0.07 per unit of risk. If you would invest 2,286 in ArcelorMittal SA ADR on November 2, 2024 and sell it today you would earn a total of 237.00 from holding ArcelorMittal SA ADR or generate 10.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ArcelorMittal SA ADR vs. Olin Corp.
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| Olin |
ArcelorMittal and Olin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Olin
The main advantage of trading using opposite ArcelorMittal and Olin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Olin 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 Olin will offset losses from the drop in Olin's long position.| ArcelorMittal vs. Agnico Eagle Mines | ArcelorMittal vs. Pan American Silver | ArcelorMittal vs. Kinross Gold | ArcelorMittal vs. Newmont Goldcorp Corp |
| Olin vs. Select Energy Services | Olin vs. Westlake Chemical | Olin vs. Sensient Technologies | Olin vs. Axalta Coating Systems |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stocks Directory Find actively traded stocks across global markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |