Correlation Between Olympic Steel and Hannon Armstrong

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Can any of the company-specific risk be diversified away by investing in both Olympic Steel and Hannon Armstrong 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 Hannon Armstrong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and Hannon Armstrong Sustainable, you can compare the effects of market volatilities on Olympic Steel and Hannon Armstrong 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 Hannon Armstrong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and Hannon Armstrong.

Diversification Opportunities for Olympic Steel and Hannon Armstrong

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Olympic and Hannon is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and Hannon Armstrong Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannon Armstrong Sus 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 Hannon Armstrong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannon Armstrong Sus has no effect on the direction of Olympic Steel i.e., Olympic Steel and Hannon Armstrong go up and down completely randomly.

Pair Corralation between Olympic Steel and Hannon Armstrong

Given the investment horizon of 90 days Olympic Steel is expected to generate 1.06 times more return on investment than Hannon Armstrong. However, Olympic Steel is 1.06 times more volatile than Hannon Armstrong Sustainable. It trades about 0.08 of its potential returns per unit of risk. Hannon Armstrong Sustainable is currently generating about -0.06 per unit of risk. If you would invest  3,748  in Olympic Steel on September 12, 2024 and sell it today you would earn a total of  452.00  from holding Olympic Steel or generate 12.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Olympic Steel  vs.  Hannon Armstrong Sustainable

 Performance 
       Timeline  
Olympic Steel 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Olympic Steel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Olympic Steel unveiled solid returns over the last few months and may actually be approaching a breakup point.
Hannon Armstrong Sus 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hannon Armstrong Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Olympic Steel and Hannon Armstrong Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Olympic Steel and Hannon Armstrong

The main advantage of trading using opposite Olympic Steel and Hannon Armstrong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, Hannon Armstrong 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 Hannon Armstrong will offset losses from the drop in Hannon Armstrong's long position.
The idea behind Olympic Steel and Hannon Armstrong Sustainable 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.
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 Global Correlations module to find global opportunities by holding instruments from different markets.

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