Correlation Between Olympic Steel and MARRIOTT

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

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

Diversification Opportunities for Olympic Steel and MARRIOTT

0.27

Correlation Coefficient

Olympic Steel  MARRIOTT

Modest diversification

The 3 months correlation between Olympic and MARRIOTT is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and MARRIOTT INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARRIOTT INTERNATIONAL 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 MARRIOTT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARRIOTT INTERNATIONAL has no effect on the direction of Olympic Steel i.e., Olympic Steel and MARRIOTT go up and down completely randomly.

Pair Corralation between Olympic Steel and MARRIOTT

Given the investment horizon of 90 days Olympic Steel is expected to under-perform the MARRIOTT. In addition to that, Olympic Steel is 4.57 times more volatile than MARRIOTT INTERNATIONAL INC. It trades about -0.05 of its total potential returns per unit of risk. MARRIOTT INTERNATIONAL INC is currently generating about -0.17 per unit of volatility. If you would invest  9,014  in MARRIOTT INTERNATIONAL INC on September 24, 2024 and sell it today you would lose (602.00) from holding MARRIOTT INTERNATIONAL INC or give up 6.68% of portfolio value over 90 days.

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

Olympic Steel  vs.  MARRIOTT INTERNATIONAL INC

Olympic Steel

Risk-Adjusted Performance

0 of 100

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 latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

MARRIOTT INTERNATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MARRIOTT INTERNATIONAL INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for MARRIOTT INTERNATIONAL INC investors.

Pair Trading with Olympic Steel and MARRIOTT

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

The idea behind Olympic Steel and MARRIOTT INTERNATIONAL INC 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.