Correlation Between Olympic Steel and Cedar Realty
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and Cedar Realty 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 Cedar Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and Cedar Realty Trust, you can compare the effects of market volatilities on Olympic Steel and Cedar Realty 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 Cedar Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and Cedar Realty.
Diversification Opportunities for Olympic Steel and Cedar Realty
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Olympic and Cedar is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and Cedar Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Realty Trust 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 Cedar Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Realty Trust has no effect on the direction of Olympic Steel i.e., Olympic Steel and Cedar Realty go up and down completely randomly.
Pair Corralation between Olympic Steel and Cedar Realty
Given the investment horizon of 90 days Olympic Steel is expected to generate 1.38 times less return on investment than Cedar Realty. But when comparing it to its historical volatility, Olympic Steel is 1.06 times less risky than Cedar Realty. It trades about 0.03 of its potential returns per unit of risk. Cedar Realty Trust is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,143 in Cedar Realty Trust on August 28, 2024 and sell it today you would earn a total of 477.00 from holding Cedar Realty Trust or generate 41.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Olympic Steel vs. Cedar Realty Trust
Performance |
| Timeline |
| Olympic Steel |
| Cedar Realty Trust |
Olympic Steel and Cedar Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and Cedar Realty
The main advantage of trading using opposite Olympic Steel and Cedar Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, Cedar Realty 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 Cedar Realty will offset losses from the drop in Cedar Realty's long position.The idea behind Olympic Steel and Cedar Realty Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Cedar Realty vs. Saul Centers | Cedar Realty vs. Wheeler Real Estate | Cedar Realty vs. Macerich Company | Cedar Realty vs. Simon Property Group |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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