Correlation Between SCOTT TECHNOLOGY and Bank of America
Can any of the company-specific risk be diversified away by investing in both SCOTT TECHNOLOGY and Bank of America 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 Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOTT TECHNOLOGY and Verizon Communications, you can compare the effects of market volatilities on SCOTT TECHNOLOGY and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOTT TECHNOLOGY and Bank of America.
Diversification Opportunities for SCOTT TECHNOLOGY and Bank of America
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SCOTT and Bank is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and Bank of America go up and down completely randomly.
Pair Corralation between SCOTT TECHNOLOGY and Bank of America
Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to generate 4.41 times less return on investment than Bank of America. In addition to that, SCOTT TECHNOLOGY is 2.24 times more volatile than Verizon Communications. It trades about 0.0 of its total potential returns per unit of risk. Verizon Communications is currently generating about 0.05 per unit of volatility. If you would invest 3,168 in Verizon Communications on November 27, 2024 and sell it today you would earn a total of 952.00 from holding Verizon Communications or generate 30.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCOTT TECHNOLOGY vs. Verizon Communications
Performance |
| Timeline |
| SCOTT TECHNOLOGY |
| Verizon Communications |
SCOTT TECHNOLOGY and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOTT TECHNOLOGY and Bank of America
The main advantage of trading using opposite SCOTT TECHNOLOGY and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| SCOTT TECHNOLOGY vs. GRIFFIN MINING LTD | SCOTT TECHNOLOGY vs. Western Copper and | SCOTT TECHNOLOGY vs. GALENA MINING LTD | SCOTT TECHNOLOGY vs. Scottish Mortgage Investment |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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