Correlation Between Olympic Steel and SunOpta
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and SunOpta 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 SunOpta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and SunOpta, you can compare the effects of market volatilities on Olympic Steel and SunOpta 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 SunOpta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and SunOpta.
Diversification Opportunities for Olympic Steel and SunOpta
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Olympic and SunOpta is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of Olympic Steel i.e., Olympic Steel and SunOpta go up and down completely randomly.
Pair Corralation between Olympic Steel and SunOpta
Given the investment horizon of 90 days Olympic Steel is expected to generate 2.31 times less return on investment than SunOpta. In addition to that, Olympic Steel is 1.11 times more volatile than SunOpta. It trades about 0.16 of its total potential returns per unit of risk. SunOpta is currently generating about 0.4 per unit of volatility. If you would invest 598.00 in SunOpta on August 27, 2024 and sell it today you would earn a total of 184.00 from holding SunOpta or generate 30.77% 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. SunOpta
Performance |
| Timeline |
| Olympic Steel |
| SunOpta |
Olympic Steel and SunOpta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and SunOpta
The main advantage of trading using opposite Olympic Steel and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, SunOpta 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 SunOpta will offset losses from the drop in SunOpta's long position.The idea behind Olympic Steel and SunOpta 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.| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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