Correlation Between Branded Legacy and Scepter Holdings
Can any of the company-specific risk be diversified away by investing in both Branded Legacy and Scepter Holdings 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 Branded Legacy and Scepter Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Branded Legacy and Scepter Holdings, you can compare the effects of market volatilities on Branded Legacy and Scepter Holdings 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 Branded Legacy with a short position of Scepter Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Branded Legacy and Scepter Holdings.
Diversification Opportunities for Branded Legacy and Scepter Holdings
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Branded and Scepter is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Branded Legacy and Scepter Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scepter Holdings and Branded Legacy 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 Branded Legacy are associated (or correlated) with Scepter Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scepter Holdings has no effect on the direction of Branded Legacy i.e., Branded Legacy and Scepter Holdings go up and down completely randomly.
Pair Corralation between Branded Legacy and Scepter Holdings
Given the investment horizon of 90 days Branded Legacy is expected to generate 2.05 times less return on investment than Scepter Holdings. But when comparing it to its historical volatility, Branded Legacy is 1.04 times less risky than Scepter Holdings. It trades about 0.05 of its potential returns per unit of risk. Scepter Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.06 in Scepter Holdings on September 2, 2024 and sell it today you would earn a total of 0.01 from holding Scepter Holdings or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Branded Legacy vs. Scepter Holdings
Performance |
| Timeline |
| Branded Legacy |
| Scepter Holdings |
Branded Legacy and Scepter Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Branded Legacy and Scepter Holdings
The main advantage of trading using opposite Branded Legacy and Scepter Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Branded Legacy position performs unexpectedly, Scepter Holdings 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 Scepter Holdings will offset losses from the drop in Scepter Holdings' long position.| Branded Legacy vs. The A2 Milk | Branded Legacy vs. Artisan Consumer Goods | Branded Legacy vs. General Mills |
| Scepter Holdings vs. Qed Connect | Scepter Holdings vs. Nates Food Co | Scepter Holdings vs. Sharing Services Global | Scepter Holdings vs. Stryve Foods |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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