Correlation Between Turning Point and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both Turning Point 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 Turning Point and Olympic Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Turning Point Brands and Olympic Steel, you can compare the effects of market volatilities on Turning Point 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 Turning Point with a short position of Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Olympic Steel.
Diversification Opportunities for Turning Point and Olympic Steel
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Turning and Olympic is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and Turning Point 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 Turning Point 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 Turning Point i.e., Turning Point and Olympic Steel go up and down completely randomly.
Pair Corralation between Turning Point and Olympic Steel
Considering the 90-day investment horizon Turning Point Brands is expected to generate 0.76 times more return on investment than Olympic Steel. However, Turning Point Brands is 1.31 times less risky than Olympic Steel. It trades about 0.2 of its potential returns per unit of risk. Olympic Steel is currently generating about -0.04 per unit of risk. If you would invest 2,411 in Turning Point Brands on August 29, 2024 and sell it today you would earn a total of 3,819 from holding Turning Point Brands or generate 158.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Turning Point Brands vs. Olympic Steel
Performance |
| Timeline |
| Turning Point Brands |
| Olympic Steel |
Turning Point and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Turning Point and Olympic Steel
The main advantage of trading using opposite Turning Point and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turning Point 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.| Turning Point vs. Imperial Brands PLC | Turning Point vs. Philip Morris International | Turning Point vs. Japan Tobacco ADR | Turning Point vs. Imperial Brands PLC |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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