Correlation Between Olympic Steel and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and BW Offshore 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 BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and BW Offshore Limited, you can compare the effects of market volatilities on Olympic Steel and BW Offshore 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 BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and BW Offshore.
Diversification Opportunities for Olympic Steel and BW Offshore
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Olympic and BWOFY is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and BW Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore Limited 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 BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore Limited has no effect on the direction of Olympic Steel i.e., Olympic Steel and BW Offshore go up and down completely randomly.
Pair Corralation between Olympic Steel and BW Offshore
Given the investment horizon of 90 days Olympic Steel is expected to under-perform the BW Offshore. In addition to that, Olympic Steel is 1.93 times more volatile than BW Offshore Limited. It trades about -0.01 of its total potential returns per unit of risk. BW Offshore Limited is currently generating about 0.07 per unit of volatility. If you would invest 412.00 in BW Offshore Limited on September 12, 2024 and sell it today you would earn a total of 143.00 from holding BW Offshore Limited or generate 34.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Olympic Steel vs. BW Offshore Limited
Performance |
| Timeline |
| Olympic Steel |
| BW Offshore Limited |
Olympic Steel and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and BW Offshore
The main advantage of trading using opposite Olympic Steel and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, BW Offshore 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| Olympic Steel vs. Universal Stainless Alloy | Olympic Steel vs. Outokumpu Oyj ADR | Olympic Steel vs. Usinas Siderurgicas de | Olympic Steel vs. POSCO Holdings |
| BW Offshore vs. Legacy Education | BW Offshore vs. Apple Inc | BW Offshore vs. NVIDIA | BW Offshore vs. Microsoft |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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