Correlation Between Scepter Holdings and SponsorsOne
Can any of the company-specific risk be diversified away by investing in both Scepter Holdings and SponsorsOne 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 Scepter Holdings and SponsorsOne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scepter Holdings and SponsorsOne, you can compare the effects of market volatilities on Scepter Holdings and SponsorsOne 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 Scepter Holdings with a short position of SponsorsOne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scepter Holdings and SponsorsOne.
Diversification Opportunities for Scepter Holdings and SponsorsOne
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Scepter and SponsorsOne is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Scepter Holdings and SponsorsOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SponsorsOne and Scepter Holdings 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 Scepter Holdings are associated (or correlated) with SponsorsOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SponsorsOne has no effect on the direction of Scepter Holdings i.e., Scepter Holdings and SponsorsOne go up and down completely randomly.
Pair Corralation between Scepter Holdings and SponsorsOne
Given the investment horizon of 90 days Scepter Holdings is expected to generate 1.14 times less return on investment than SponsorsOne. But when comparing it to its historical volatility, Scepter Holdings is 1.28 times less risky than SponsorsOne. It trades about 0.07 of its potential returns per unit of risk. SponsorsOne is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.14 in SponsorsOne on August 29, 2024 and sell it today you would lose (0.14) from holding SponsorsOne or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scepter Holdings vs. SponsorsOne
Performance |
| Timeline |
| Scepter Holdings |
| SponsorsOne |
Scepter Holdings and SponsorsOne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scepter Holdings and SponsorsOne
The main advantage of trading using opposite Scepter Holdings and SponsorsOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scepter Holdings position performs unexpectedly, SponsorsOne 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 SponsorsOne will offset losses from the drop in SponsorsOne's long position.| Scepter Holdings vs. Artisan Consumer Goods | Scepter Holdings vs. The A2 Milk | Scepter Holdings vs. General Mills |
| SponsorsOne vs. Salesforce | SponsorsOne vs. SAP SE ADR | SponsorsOne vs. ServiceNow | SponsorsOne vs. Intuit Inc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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