Correlation Between CAVA Group, and Olympic Steel

Can any of the company-specific risk be diversified away by investing in both CAVA Group, and Olympic Steel 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 CAVA Group, and Olympic Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CAVA Group, and Olympic Steel, you can compare the effects of market volatilities on CAVA Group, and Olympic Steel 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 CAVA Group, with a short position of Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAVA Group, and Olympic Steel.

Diversification Opportunities for CAVA Group, and Olympic Steel

0.43

Correlation Coefficient

CAVA Group,  Olympic Steel

Very weak diversification

The 3 months correlation between CAVA and Olympic is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding CAVA Group, and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and CAVA Group, 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 CAVA Group, are associated (or correlated) with Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of CAVA Group, i.e., CAVA Group, and Olympic Steel go up and down completely randomly.

Pair Corralation between CAVA Group, and Olympic Steel

Given the investment horizon of 90 days CAVA Group, is expected to under-perform the Olympic Steel. In addition to that, CAVA Group, is 1.33 times more volatile than Olympic Steel. It trades about -0.12 of its total potential returns per unit of risk. Olympic Steel is currently generating about 0.0 per unit of volatility. If you would invest  4,012  in Olympic Steel on September 18, 2024 and sell it today you would lose (19.00) from holding Olympic Steel or give up 0.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

CAVA Group,  vs.  Olympic Steel

CAVA Group,

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CAVA Group, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CAVA Group, is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Olympic Steel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Olympic Steel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Olympic Steel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CAVA Group, and Olympic Steel

The main advantage of trading using opposite CAVA Group, and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAVA Group, position performs unexpectedly, Olympic Steel 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 Olympic Steel will offset losses from the drop in Olympic Steel's long position.

The idea behind CAVA Group, and Olympic Steel 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.