Correlation Between Olympic Steel and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and Parker Hannifin 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 Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and Parker Hannifin, you can compare the effects of market volatilities on Olympic Steel and Parker Hannifin 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 Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and Parker Hannifin.
Diversification Opportunities for Olympic Steel and Parker Hannifin
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Olympic and Parker is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin 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 Parker Hannifin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parker Hannifin has no effect on the direction of Olympic Steel i.e., Olympic Steel and Parker Hannifin go up and down completely randomly.
Pair Corralation between Olympic Steel and Parker Hannifin
Given the investment horizon of 90 days Olympic Steel is expected to generate 2.15 times less return on investment than Parker Hannifin. In addition to that, Olympic Steel is 1.6 times more volatile than Parker Hannifin. It trades about 0.03 of its total potential returns per unit of risk. Parker Hannifin is currently generating about 0.12 per unit of volatility. If you would invest 28,808 in Parker Hannifin on September 2, 2024 and sell it today you would earn a total of 41,482 from holding Parker Hannifin or generate 143.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Olympic Steel vs. Parker Hannifin
Performance |
| Timeline |
| Olympic Steel |
| Parker Hannifin |
Olympic Steel and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and Parker Hannifin
The main advantage of trading using opposite Olympic Steel and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, Parker Hannifin 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 Parker Hannifin will offset losses from the drop in Parker Hannifin'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 |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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