Correlation Between Olympic Steel and SEI Investments
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and SEI Investments 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 SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and SEI Investments, you can compare the effects of market volatilities on Olympic Steel and SEI Investments 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 SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and SEI Investments.
Diversification Opportunities for Olympic Steel and SEI Investments
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Olympic and SEI is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments 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 SEI Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Investments has no effect on the direction of Olympic Steel i.e., Olympic Steel and SEI Investments go up and down completely randomly.
Pair Corralation between Olympic Steel and SEI Investments
Given the investment horizon of 90 days Olympic Steel is expected to generate 2.92 times more return on investment than SEI Investments. However, Olympic Steel is 2.92 times more volatile than SEI Investments. It trades about 0.28 of its potential returns per unit of risk. SEI Investments is currently generating about 0.31 per unit of risk. If you would invest 3,512 in Olympic Steel on September 4, 2024 and sell it today you would earn a total of 771.00 from holding Olympic Steel or generate 21.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Olympic Steel vs. SEI Investments
Performance |
| Timeline |
| Olympic Steel |
| SEI Investments |
Olympic Steel and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and SEI Investments
The main advantage of trading using opposite Olympic Steel and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, SEI Investments 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 SEI Investments will offset losses from the drop in SEI Investments' long position.| Olympic Steel vs. Constellium Nv | Olympic Steel vs. Century Aluminum | Olympic Steel vs. China Hongqiao Group | Olympic Steel vs. Kaiser Aluminum |
| SEI Investments vs. Commerce Bancshares | SEI Investments vs. RLI Corp | SEI Investments vs. Westamerica Bancorporation | SEI Investments vs. Brown Brown |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |