Correlation Between Olympic Steel and Pan American
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and Pan American 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 Pan American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and Pan American Silver, you can compare the effects of market volatilities on Olympic Steel and Pan American 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 Pan American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and Pan American.
Diversification Opportunities for Olympic Steel and Pan American
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Olympic and Pan is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and Pan American Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan American Silver 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 Pan American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan American Silver has no effect on the direction of Olympic Steel i.e., Olympic Steel and Pan American go up and down completely randomly.
Pair Corralation between Olympic Steel and Pan American
Given the investment horizon of 90 days Olympic Steel is expected to under-perform the Pan American. But the stock apears to be less risky and, when comparing its historical volatility, Olympic Steel is 1.7 times less risky than Pan American. The stock trades about -0.33 of its potential returns per unit of risk. The Pan American Silver is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,689 in Pan American Silver on February 3, 2024 and sell it today you would earn a total of 149.00 from holding Pan American Silver or generate 8.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Olympic Steel vs. Pan American Silver
Performance |
Timeline |
Olympic Steel |
Pan American Silver |
Olympic Steel and Pan American Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Olympic Steel and Pan American
The main advantage of trading using opposite Olympic Steel and Pan American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, Pan American 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 Pan American will offset losses from the drop in Pan American's long position.Olympic Steel vs. China Hongqiao Group | Olympic Steel vs. Alumina Limited PK | Olympic Steel vs. Norsk Hydro ASA |
Pan American vs. China Hongqiao Group | Pan American vs. Alumina Limited PK | Pan American vs. Norsk Hydro ASA |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
Money Managers Screen money managers from public funds and ETFs managed around the world | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation |