Correlation Between SSC Security and Resideo Technologies
Can any of the company-specific risk be diversified away by investing in both SSC Security and Resideo Technologies 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 SSC Security and Resideo Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSC Security Services and Resideo Technologies, you can compare the effects of market volatilities on SSC Security and Resideo Technologies 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 SSC Security with a short position of Resideo Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSC Security and Resideo Technologies.
Diversification Opportunities for SSC Security and Resideo Technologies
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SSC and Resideo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SSC Security Services and Resideo Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resideo Technologies and SSC Security 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 SSC Security Services are associated (or correlated) with Resideo Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resideo Technologies has no effect on the direction of SSC Security i.e., SSC Security and Resideo Technologies go up and down completely randomly.
Pair Corralation between SSC Security and Resideo Technologies
Assuming the 90 days horizon SSC Security is expected to generate 1.2 times less return on investment than Resideo Technologies. In addition to that, SSC Security is 2.86 times more volatile than Resideo Technologies. It trades about 0.03 of its total potential returns per unit of risk. Resideo Technologies is currently generating about 0.1 per unit of volatility. If you would invest 2,097 in Resideo Technologies on September 2, 2024 and sell it today you would earn a total of 621.00 from holding Resideo Technologies or generate 29.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSC Security Services vs. Resideo Technologies
Performance |
| Timeline |
| SSC Security Services |
| Resideo Technologies |
SSC Security and Resideo Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSC Security and Resideo Technologies
The main advantage of trading using opposite SSC Security and Resideo Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSC Security position performs unexpectedly, Resideo Technologies 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 Resideo Technologies will offset losses from the drop in Resideo Technologies' long position.| SSC Security vs. Allegion PLC | SSC Security vs. MSA Safety | SSC Security vs. HUMANA INC | SSC Security vs. Aquagold International |
| Resideo Technologies vs. Allegion PLC | Resideo Technologies vs. MSA Safety | Resideo Technologies vs. NL Industries | Resideo Technologies vs. Brady |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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