Correlation Between Scope Metals and Elco
Can any of the company-specific risk be diversified away by investing in both Scope Metals and Elco 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 Scope Metals and Elco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scope Metals Group and Elco, you can compare the effects of market volatilities on Scope Metals and Elco 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 Scope Metals with a short position of Elco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scope Metals and Elco.
Diversification Opportunities for Scope Metals and Elco
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scope and Elco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Scope Metals Group and Elco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elco and Scope Metals 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 Scope Metals Group are associated (or correlated) with Elco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elco has no effect on the direction of Scope Metals i.e., Scope Metals and Elco go up and down completely randomly.
Pair Corralation between Scope Metals and Elco
Assuming the 90 days trading horizon Scope Metals Group is expected to generate 1.94 times more return on investment than Elco. However, Scope Metals is 1.94 times more volatile than Elco. It trades about 0.35 of its potential returns per unit of risk. Elco is currently generating about 0.54 per unit of risk. If you would invest 1,160,000 in Scope Metals Group on September 1, 2024 and sell it today you would earn a total of 217,000 from holding Scope Metals Group or generate 18.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scope Metals Group vs. Elco
Performance |
| Timeline |
| Scope Metals Group |
| Elco |
Scope Metals and Elco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scope Metals and Elco
The main advantage of trading using opposite Scope Metals and Elco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scope Metals position performs unexpectedly, Elco 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 Elco will offset losses from the drop in Elco's long position.| Scope Metals vs. Delek Automotive Systems | Scope Metals vs. Kerur Holdings | Scope Metals vs. Neto ME Holdings | Scope Metals vs. Bank Leumi Le Israel |
| Elco vs. Alony Hetz Properties | Elco vs. Electra | Elco vs. Clal Insurance Enterprises | Elco vs. Delek Automotive Systems |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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