Correlation Between Olympic Steel and Aegon NV
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and Aegon NV 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 Olympic Steel and Aegon NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and Aegon NV ADR, you can compare the effects of market volatilities on Olympic Steel and Aegon NV 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 Olympic Steel with a short position of Aegon NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and Aegon NV.
Diversification Opportunities for Olympic Steel and Aegon NV
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Olympic and Aegon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and Aegon NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV ADR and Olympic Steel 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 Olympic Steel are associated (or correlated) with Aegon NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegon NV ADR has no effect on the direction of Olympic Steel i.e., Olympic Steel and Aegon NV go up and down completely randomly.
Pair Corralation between Olympic Steel and Aegon NV
Given the investment horizon of 90 days Olympic Steel is expected to generate 2.48 times more return on investment than Aegon NV. However, Olympic Steel is 2.48 times more volatile than Aegon NV ADR. It trades about 0.17 of its potential returns per unit of risk. Aegon NV ADR is currently generating about -0.03 per unit of risk. If you would invest 3,717 in Olympic Steel on August 30, 2024 and sell it today you would earn a total of 514.00 from holding Olympic Steel or generate 13.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Olympic Steel vs. Aegon NV ADR
Performance |
| Timeline |
| Olympic Steel |
| Aegon NV ADR |
Olympic Steel and Aegon NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and Aegon NV
The main advantage of trading using opposite Olympic Steel and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, Aegon NV 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 Aegon NV will offset losses from the drop in Aegon NV's long position.| Olympic Steel vs. Franco Nevada | Olympic Steel vs. Osisko Gold Ro | Olympic Steel vs. Sandstorm Gold Ltd | Olympic Steel vs. Royal Gold |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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