Correlation Between Saga Plc and Scottish American
Can any of the company-specific risk be diversified away by investing in both Saga Plc and Scottish American 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 Saga Plc and Scottish American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saga plc and Scottish American Investment, you can compare the effects of market volatilities on Saga Plc and Scottish American 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 Saga Plc with a short position of Scottish American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saga Plc and Scottish American.
Diversification Opportunities for Saga Plc and Scottish American
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Saga and Scottish is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Saga plc and Scottish American Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish American and Saga Plc 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 Saga plc are associated (or correlated) with Scottish American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scottish American has no effect on the direction of Saga Plc i.e., Saga Plc and Scottish American go up and down completely randomly.
Pair Corralation between Saga Plc and Scottish American
Assuming the 90 days trading horizon Saga Plc is expected to generate 2.21 times less return on investment than Scottish American. In addition to that, Saga Plc is 2.01 times more volatile than Scottish American Investment. It trades about 0.04 of its total potential returns per unit of risk. Scottish American Investment is currently generating about 0.17 per unit of volatility. If you would invest 49,737 in Scottish American Investment on September 1, 2024 and sell it today you would earn a total of 1,763 from holding Scottish American Investment or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saga plc vs. Scottish American Investment
Performance |
| Timeline |
| Saga plc |
| Scottish American |
Saga Plc and Scottish American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saga Plc and Scottish American
The main advantage of trading using opposite Saga Plc and Scottish American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saga Plc position performs unexpectedly, Scottish American 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 Scottish American will offset losses from the drop in Scottish American's long position.| Saga Plc vs. BE Semiconductor Industries | Saga Plc vs. Morgan Advanced Materials | Saga Plc vs. Compagnie Plastic Omnium | Saga Plc vs. Cars Inc |
| Scottish American vs. Toyota Motor Corp | Scottish American vs. SoftBank Group Corp | Scottish American vs. OTP Bank Nyrt | Scottish American vs. Las Vegas Sands |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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