Correlation Between Olympic Steel and MERCK
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By analyzing existing cross correlation between Olympic Steel and MERCK INC, you can compare the effects of market volatilities on Olympic Steel and MERCK 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 MERCK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and MERCK.
Diversification Opportunities for Olympic Steel and MERCK
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Olympic and MERCK is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and MERCK INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MERCK 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 MERCK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MERCK INC has no effect on the direction of Olympic Steel i.e., Olympic Steel and MERCK go up and down completely randomly.
Pair Corralation between Olympic Steel and MERCK
Given the investment horizon of 90 days Olympic Steel is expected to generate 4.35 times more return on investment than MERCK. However, Olympic Steel is 4.35 times more volatile than MERCK INC. It trades about 0.23 of its potential returns per unit of risk. MERCK INC is currently generating about -0.2 per unit of risk. If you would invest 3,588 in Olympic Steel on September 1, 2024 and sell it today you would earn a total of 640.00 from holding Olympic Steel or generate 17.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Olympic Steel vs. MERCK INC
Performance |
| Timeline |
| Olympic Steel |
| MERCK INC |
Olympic Steel and MERCK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and MERCK
The main advantage of trading using opposite Olympic Steel and MERCK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, MERCK 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 MERCK will offset losses from the drop in MERCK's long position.| Olympic Steel vs. Fortitude Gold Corp | Olympic Steel vs. New Gold | Olympic Steel vs. Galiano Gold | Olympic Steel vs. GoldMining |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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