Correlation Between MAVEN WIRELESS and SCOTT TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both MAVEN WIRELESS and SCOTT TECHNOLOGY 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 MAVEN WIRELESS and SCOTT TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAVEN WIRELESS SWEDEN and SCOTT TECHNOLOGY, you can compare the effects of market volatilities on MAVEN WIRELESS and SCOTT TECHNOLOGY 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 MAVEN WIRELESS with a short position of SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAVEN WIRELESS and SCOTT TECHNOLOGY.
Diversification Opportunities for MAVEN WIRELESS and SCOTT TECHNOLOGY
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MAVEN and SCOTT is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding MAVEN WIRELESS SWEDEN and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY and MAVEN WIRELESS 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 MAVEN WIRELESS SWEDEN are associated (or correlated) with SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of MAVEN WIRELESS i.e., MAVEN WIRELESS and SCOTT TECHNOLOGY go up and down completely randomly.
Pair Corralation between MAVEN WIRELESS and SCOTT TECHNOLOGY
Assuming the 90 days horizon MAVEN WIRELESS SWEDEN is expected to under-perform the SCOTT TECHNOLOGY. But the stock apears to be less risky and, when comparing its historical volatility, MAVEN WIRELESS SWEDEN is 1.0 times less risky than SCOTT TECHNOLOGY. The stock trades about -0.06 of its potential returns per unit of risk. The SCOTT TECHNOLOGY is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 115.00 in SCOTT TECHNOLOGY on October 18, 2024 and sell it today you would earn a total of 10.00 from holding SCOTT TECHNOLOGY or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAVEN WIRELESS SWEDEN vs. SCOTT TECHNOLOGY
Performance |
| Timeline |
| MAVEN WIRELESS SWEDEN |
| SCOTT TECHNOLOGY |
MAVEN WIRELESS and SCOTT TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAVEN WIRELESS and SCOTT TECHNOLOGY
The main advantage of trading using opposite MAVEN WIRELESS and SCOTT TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAVEN WIRELESS position performs unexpectedly, SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY will offset losses from the drop in SCOTT TECHNOLOGY's long position.| MAVEN WIRELESS vs. INTERCONT HOTELS | MAVEN WIRELESS vs. Regal Hotels International | MAVEN WIRELESS vs. Scandinavian Tobacco Group | MAVEN WIRELESS vs. Wyndham Hotels Resorts |
| SCOTT TECHNOLOGY vs. AGRICULTBK HADR25 YC | SCOTT TECHNOLOGY vs. MAVEN WIRELESS SWEDEN | SCOTT TECHNOLOGY vs. Dairy Farm International | SCOTT TECHNOLOGY vs. FARM 51 GROUP |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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