Correlation Between Old Republic and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Old Republic and Algoma 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 Old Republic and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and Algoma Steel Group, you can compare the effects of market volatilities on Old Republic and Algoma 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 Old Republic with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Algoma Steel.
Diversification Opportunities for Old Republic and Algoma Steel
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Algoma is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group and Old Republic 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 Old Republic International are associated (or correlated) with Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of Old Republic i.e., Old Republic and Algoma Steel go up and down completely randomly.
Pair Corralation between Old Republic and Algoma Steel
Considering the 90-day investment horizon Old Republic International is expected to generate 0.42 times more return on investment than Algoma Steel. However, Old Republic International is 2.36 times less risky than Algoma Steel. It trades about 0.36 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.09 per unit of risk. If you would invest 3,530 in Old Republic International on August 27, 2024 and sell it today you would earn a total of 330.00 from holding Old Republic International or generate 9.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Republic International vs. Algoma Steel Group
Performance |
| Timeline |
| Old Republic Interna |
| Algoma Steel Group |
Old Republic and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and Algoma Steel
The main advantage of trading using opposite Old Republic and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic position performs unexpectedly, Algoma 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.| Old Republic vs. Fiverr International | Old Republic vs. Pinterest | Old Republic vs. Upstart Holdings | Old Republic vs. Fastly Inc |
| Algoma Steel vs. Labrador Gold Corp | Algoma Steel vs. Aurion Resources | Algoma Steel vs. Puma Exploration | Algoma Steel vs. Golden Star Resource |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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