Correlation Between Scotts Miracle and Lavoro Limited
Can any of the company-specific risk be diversified away by investing in both Scotts Miracle and Lavoro Limited 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 Scotts Miracle and Lavoro Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scotts Miracle Gro and Lavoro Limited Class, you can compare the effects of market volatilities on Scotts Miracle and Lavoro Limited 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 Scotts Miracle with a short position of Lavoro Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scotts Miracle and Lavoro Limited.
Diversification Opportunities for Scotts Miracle and Lavoro Limited
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Scotts and Lavoro is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Scotts Miracle Gro and Lavoro Limited Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lavoro Limited Class and Scotts Miracle 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 Scotts Miracle Gro are associated (or correlated) with Lavoro Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lavoro Limited Class has no effect on the direction of Scotts Miracle i.e., Scotts Miracle and Lavoro Limited go up and down completely randomly.
Pair Corralation between Scotts Miracle and Lavoro Limited
Considering the 90-day investment horizon Scotts Miracle Gro is expected to generate 0.68 times more return on investment than Lavoro Limited. However, Scotts Miracle Gro is 1.46 times less risky than Lavoro Limited. It trades about 0.06 of its potential returns per unit of risk. Lavoro Limited Class is currently generating about 0.02 per unit of risk. If you would invest 6,993 in Scotts Miracle Gro on August 31, 2024 and sell it today you would earn a total of 587.00 from holding Scotts Miracle Gro or generate 8.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scotts Miracle Gro vs. Lavoro Limited Class
Performance |
| Timeline |
| Scotts Miracle Gro |
| Lavoro Limited Class |
Scotts Miracle and Lavoro Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scotts Miracle and Lavoro Limited
The main advantage of trading using opposite Scotts Miracle and Lavoro Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scotts Miracle position performs unexpectedly, Lavoro Limited 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 Lavoro Limited will offset losses from the drop in Lavoro Limited's long position.| Scotts Miracle vs. Corteva | Scotts Miracle vs. CF Industries Holdings | Scotts Miracle vs. American Vanguard | Scotts Miracle vs. Intrepid Potash |
| Lavoro Limited vs. Valneva SE ADR | Lavoro Limited vs. Sphere Entertainment Co | Lavoro Limited vs. SunLink Health Systems | Lavoro Limited vs. National CineMedia |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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