Correlation Between Simon Property and Olympic Steel

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

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

Diversification Opportunities for Simon Property and Olympic Steel

0.42

Correlation Coefficient

Simon Property  Olympic Steel

Very weak diversification

The 3 months correlation between Simon and Olympic is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and Simon Property 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 Simon Property 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 Simon Property i.e., Simon Property and Olympic Steel go up and down completely randomly.

Pair Corralation between Simon Property and Olympic Steel

Considering the 90-day investment horizon Simon Property Group is expected to generate 0.49 times more return on investment than Olympic Steel. However, Simon Property Group is 2.03 times less risky than Olympic Steel. It trades about 0.09 of its potential returns per unit of risk. Olympic Steel is currently generating about -0.09 per unit of risk. If you would invest  14,425  in Simon Property Group on December 2, 2024 and sell it today you would earn a total of  4,184  from holding Simon Property Group or generate 29.01% return on investment over 90 days.

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

Simon Property Group  vs.  Olympic Steel

Simon Property Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Simon Property is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the 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 Simon Property and Olympic Steel

The main advantage of trading using opposite Simon Property and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property 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 Simon Property 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.