Correlation Between Star Alliance and Scotch Creek
Can any of the company-specific risk be diversified away by investing in both Star Alliance and Scotch Creek 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 Star Alliance and Scotch Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Alliance International and Scotch Creek Ventures, you can compare the effects of market volatilities on Star Alliance and Scotch Creek 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 Star Alliance with a short position of Scotch Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Alliance and Scotch Creek.
Diversification Opportunities for Star Alliance and Scotch Creek
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Star and Scotch is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Star Alliance International and Scotch Creek Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scotch Creek Ventures and Star Alliance 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 Star Alliance International are associated (or correlated) with Scotch Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scotch Creek Ventures has no effect on the direction of Star Alliance i.e., Star Alliance and Scotch Creek go up and down completely randomly.
Pair Corralation between Star Alliance and Scotch Creek
Given the investment horizon of 90 days Star Alliance International is expected to generate 0.79 times more return on investment than Scotch Creek. However, Star Alliance International is 1.27 times less risky than Scotch Creek. It trades about -0.09 of its potential returns per unit of risk. Scotch Creek Ventures is currently generating about -0.17 per unit of risk. If you would invest 0.12 in Star Alliance International on August 28, 2024 and sell it today you would lose (0.03) from holding Star Alliance International or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Star Alliance International vs. Scotch Creek Ventures
Performance |
| Timeline |
| Star Alliance Intern |
| Scotch Creek Ventures |
Star Alliance and Scotch Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Alliance and Scotch Creek
The main advantage of trading using opposite Star Alliance and Scotch Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Alliance position performs unexpectedly, Scotch Creek 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 Scotch Creek will offset losses from the drop in Scotch Creek's long position.| Star Alliance vs. Vior Inc | Star Alliance vs. Norsemont Mining | Star Alliance vs. Big Ridge Gold | Star Alliance vs. Cerrado Gold |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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