Correlation Between LS Starrett and Makita Corp
Can any of the company-specific risk be diversified away by investing in both LS Starrett and Makita Corp 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 LS Starrett and Makita Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LS Starrett and Makita Corp, you can compare the effects of market volatilities on LS Starrett and Makita Corp 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 LS Starrett with a short position of Makita Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS Starrett and Makita Corp.
Diversification Opportunities for LS Starrett and Makita Corp
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SCX and Makita is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding LS Starrett and Makita Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Makita Corp and LS Starrett 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 LS Starrett are associated (or correlated) with Makita Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Makita Corp has no effect on the direction of LS Starrett i.e., LS Starrett and Makita Corp go up and down completely randomly.
Pair Corralation between LS Starrett and Makita Corp
If you would invest 2,720 in Makita Corp on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Makita Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LS Starrett vs. Makita Corp
Performance |
| Timeline |
| LS Starrett |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Makita Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
LS Starrett and Makita Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LS Starrett and Makita Corp
The main advantage of trading using opposite LS Starrett and Makita Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS Starrett position performs unexpectedly, Makita Corp 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 Makita Corp will offset losses from the drop in Makita Corp's long position.| LS Starrett vs. Eastern Co | LS Starrett vs. Timken Company | LS Starrett vs. Lincoln Electric Holdings | LS Starrett vs. Hillman Solutions Corp |
| Makita Corp vs. Snap On | Makita Corp vs. Stanley Black Decker | Makita Corp vs. Eastern Co | Makita Corp vs. Hillman Solutions Corp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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