Correlation Between Olympic Steel and Enersys
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and Enersys 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 Enersys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and Enersys, you can compare the effects of market volatilities on Olympic Steel and Enersys 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 Enersys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and Enersys.
Diversification Opportunities for Olympic Steel and Enersys
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Olympic and Enersys is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Olympic Steel i.e., Olympic Steel and Enersys go up and down completely randomly.
Pair Corralation between Olympic Steel and Enersys
Given the investment horizon of 90 days Olympic Steel is expected to generate 1.1 times more return on investment than Enersys. However, Olympic Steel is 1.1 times more volatile than Enersys. It trades about 0.2 of its potential returns per unit of risk. Enersys is currently generating about 0.16 per unit of risk. If you would invest 3,198 in Olympic Steel on November 3, 2024 and sell it today you would earn a total of 249.00 from holding Olympic Steel or generate 7.79% 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. Enersys
Performance |
| Timeline |
| Olympic Steel |
| Enersys |
Olympic Steel and Enersys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and Enersys
The main advantage of trading using opposite Olympic Steel and Enersys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, Enersys 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 Enersys will offset losses from the drop in Enersys' long position.| Olympic Steel vs. Outokumpu Oyj ADR | Olympic Steel vs. Usinas Siderurgicas de | Olympic Steel vs. POSCO Holdings | Olympic Steel vs. Steel Dynamics |
| Enersys vs. Advanced Energy Industries | Enersys vs. Hubbell | Enersys vs. Acuity Brands | Enersys vs. Kimball Electronics |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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