Correlation Between Olympus and Canon
Can any of the company-specific risk be diversified away by investing in both Olympus and Canon 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 Olympus and Canon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympus and Canon Inc, you can compare the effects of market volatilities on Olympus and Canon 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 Olympus with a short position of Canon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympus and Canon.
Diversification Opportunities for Olympus and Canon
Very good diversification
The 3 months correlation between Olympus and Canon is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Olympus and Canon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Inc and Olympus 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 Olympus are associated (or correlated) with Canon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Inc has no effect on the direction of Olympus i.e., Olympus and Canon go up and down completely randomly.
Pair Corralation between Olympus and Canon
Assuming the 90 days trading horizon Olympus is expected to generate 2.28 times less return on investment than Canon. But when comparing it to its historical volatility, Olympus is 1.11 times less risky than Canon. It trades about 0.04 of its potential returns per unit of risk. Canon Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,250 in Canon Inc on September 14, 2024 and sell it today you would earn a total of 930.00 from holding Canon Inc or generate 41.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.64% |
| Values | Daily Returns |
Olympus vs. Canon Inc
Performance |
| Timeline |
| Olympus |
| Canon Inc |
Olympus and Canon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympus and Canon
The main advantage of trading using opposite Olympus and Canon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympus position performs unexpectedly, Canon 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 Canon will offset losses from the drop in Canon's long position.| Olympus vs. Westinghouse Air Brake | Olympus vs. Cars Inc | Olympus vs. Wizz Air Holdings | Olympus vs. Ryanair Holdings plc |
| Canon vs. Direct Line Insurance | Canon vs. MAGNUM MINING EXP | Canon vs. SIEM OFFSHORE NEW | Canon vs. MINCO SILVER |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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