Correlation Between Sweetgreen and Olympic Steel

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

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

Diversification Opportunities for Sweetgreen and Olympic Steel

0.6

Correlation Coefficient

Sweetgreen  Olympic Steel

Poor diversification

The 3 months correlation between Sweetgreen and Olympic is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and Sweetgreen 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 Sweetgreen 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 Sweetgreen i.e., Sweetgreen and Olympic Steel go up and down completely randomly.

Pair Corralation between Sweetgreen and Olympic Steel

Allowing for the 90-day total investment horizon Sweetgreen is expected to under-perform the Olympic Steel. In addition to that, Sweetgreen is 1.43 times more volatile than Olympic Steel. It trades about -0.35 of its total potential returns per unit of risk. Olympic Steel is currently generating about -0.08 per unit of volatility. If you would invest  3,375  in Olympic Steel on December 5, 2024 and sell it today you would lose (202.00) from holding Olympic Steel or give up 5.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Sweetgreen  vs.  Olympic Steel

Sweetgreen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sweetgreen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Olympic Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Olympic Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sweetgreen and Olympic Steel

The main advantage of trading using opposite Sweetgreen and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweetgreen 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 Sweetgreen 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.