Correlation Between Olympic Steel and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and Eldorado Gold 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 Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and Eldorado Gold Corp, you can compare the effects of market volatilities on Olympic Steel and Eldorado Gold 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 Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and Eldorado Gold.
Diversification Opportunities for Olympic Steel and Eldorado Gold
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Olympic and Eldorado is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold Corp 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 Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of Olympic Steel i.e., Olympic Steel and Eldorado Gold go up and down completely randomly.
Pair Corralation between Olympic Steel and Eldorado Gold
Given the investment horizon of 90 days Olympic Steel is expected to generate 1.18 times more return on investment than Eldorado Gold. However, Olympic Steel is 1.18 times more volatile than Eldorado Gold Corp. It trades about 0.16 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about -0.12 per unit of risk. If you would invest 3,807 in Olympic Steel on August 27, 2024 and sell it today you would earn a total of 434.00 from holding Olympic Steel or generate 11.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Olympic Steel vs. Eldorado Gold Corp
Performance |
| Timeline |
| Olympic Steel |
| Eldorado Gold Corp |
Olympic Steel and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and Eldorado Gold
The main advantage of trading using opposite Olympic Steel and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, Eldorado Gold 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 Eldorado Gold will offset losses from the drop in Eldorado Gold's long position.The idea behind Olympic Steel and Eldorado Gold Corp 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.| Eldorado Gold vs. IAMGold | Eldorado Gold vs. Kinross Gold | Eldorado Gold vs. Agnico Eagle Mines | Eldorado Gold vs. Gold Fields Ltd |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |