Correlation Between Olympic Steel and RadNet
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and RadNet 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 RadNet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and RadNet Inc, you can compare the effects of market volatilities on Olympic Steel and RadNet 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 RadNet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and RadNet.
Diversification Opportunities for Olympic Steel and RadNet
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Olympic and RadNet is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and RadNet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RadNet Inc 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 RadNet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RadNet Inc has no effect on the direction of Olympic Steel i.e., Olympic Steel and RadNet go up and down completely randomly.
Pair Corralation between Olympic Steel and RadNet
Given the investment horizon of 90 days Olympic Steel is expected to generate 1.39 times less return on investment than RadNet. But when comparing it to its historical volatility, Olympic Steel is 1.19 times less risky than RadNet. It trades about 0.23 of its potential returns per unit of risk. RadNet Inc is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 6,504 in RadNet Inc on September 1, 2024 and sell it today you would earn a total of 1,672 from holding RadNet Inc or generate 25.71% 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. RadNet Inc
Performance |
| Timeline |
| Olympic Steel |
| RadNet Inc |
Olympic Steel and RadNet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and RadNet
The main advantage of trading using opposite Olympic Steel and RadNet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, RadNet 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 RadNet will offset losses from the drop in RadNet's long position.| Olympic Steel vs. Fortitude Gold Corp | Olympic Steel vs. New Gold | Olympic Steel vs. Galiano Gold | Olympic Steel vs. GoldMining |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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