Correlation Between ESH Acquisition and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both ESH Acquisition 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 ESH Acquisition and Olympic Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESH Acquisition Corp and Olympic Steel, you can compare the effects of market volatilities on ESH Acquisition 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 ESH Acquisition with a short position of Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESH Acquisition and Olympic Steel.
Diversification Opportunities for ESH Acquisition and Olympic Steel
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ESH and Olympic is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding ESH Acquisition Corp and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and ESH Acquisition 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 ESH Acquisition Corp 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 ESH Acquisition i.e., ESH Acquisition and Olympic Steel go up and down completely randomly.
Pair Corralation between ESH Acquisition and Olympic Steel
Given the investment horizon of 90 days ESH Acquisition Corp is expected to generate 0.66 times more return on investment than Olympic Steel. However, ESH Acquisition Corp is 1.51 times less risky than Olympic Steel. It trades about 0.04 of its potential returns per unit of risk. Olympic Steel is currently generating about -0.15 per unit of risk. If you would invest 1,060 in ESH Acquisition Corp on December 1, 2024 and sell it today you would earn a total of 39.00 from holding ESH Acquisition Corp or generate 3.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ESH Acquisition Corp vs. Olympic Steel
Performance |
Timeline |
ESH Acquisition Corp |
Olympic Steel |
ESH Acquisition and Olympic Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ESH Acquisition and Olympic Steel
The main advantage of trading using opposite ESH Acquisition and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESH Acquisition 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.ESH Acquisition vs. Global E Online | ESH Acquisition vs. Fluent Inc | ESH Acquisition vs. ZW Data Action | ESH Acquisition vs. Cheniere Energy Partners |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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