Correlation Between SCOTT TECHNOLOGY and MAVEN WIRELESS
Can any of the company-specific risk be diversified away by investing in both SCOTT TECHNOLOGY and MAVEN WIRELESS 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 SCOTT TECHNOLOGY and MAVEN WIRELESS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOTT TECHNOLOGY and MAVEN WIRELESS SWEDEN, you can compare the effects of market volatilities on SCOTT TECHNOLOGY and MAVEN WIRELESS 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 SCOTT TECHNOLOGY with a short position of MAVEN WIRELESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOTT TECHNOLOGY and MAVEN WIRELESS.
Diversification Opportunities for SCOTT TECHNOLOGY and MAVEN WIRELESS
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SCOTT and MAVEN is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and MAVEN WIRELESS SWEDEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAVEN WIRELESS SWEDEN and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY are associated (or correlated) with MAVEN WIRELESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAVEN WIRELESS SWEDEN has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and MAVEN WIRELESS go up and down completely randomly.
Pair Corralation between SCOTT TECHNOLOGY and MAVEN WIRELESS
Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to generate 10.07 times less return on investment than MAVEN WIRELESS. But when comparing it to its historical volatility, SCOTT TECHNOLOGY is 2.06 times less risky than MAVEN WIRELESS. It trades about 0.05 of its potential returns per unit of risk. MAVEN WIRELESS SWEDEN is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 84.00 in MAVEN WIRELESS SWEDEN on November 5, 2024 and sell it today you would earn a total of 18.00 from holding MAVEN WIRELESS SWEDEN or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCOTT TECHNOLOGY vs. MAVEN WIRELESS SWEDEN
Performance |
| Timeline |
| SCOTT TECHNOLOGY |
| MAVEN WIRELESS SWEDEN |
SCOTT TECHNOLOGY and MAVEN WIRELESS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOTT TECHNOLOGY and MAVEN WIRELESS
The main advantage of trading using opposite SCOTT TECHNOLOGY and MAVEN WIRELESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY position performs unexpectedly, MAVEN WIRELESS 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 MAVEN WIRELESS will offset losses from the drop in MAVEN WIRELESS's long position.| SCOTT TECHNOLOGY vs. Darden Restaurants | SCOTT TECHNOLOGY vs. Retail Estates NV | SCOTT TECHNOLOGY vs. Carnegie Clean Energy | SCOTT TECHNOLOGY vs. BJs Wholesale Club |
| MAVEN WIRELESS vs. ATOSS SOFTWARE | MAVEN WIRELESS vs. Direct Line Insurance | MAVEN WIRELESS vs. OPERA SOFTWARE | MAVEN WIRELESS vs. MAGIC SOFTWARE ENTR |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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