Correlation Between Scientific Games and Major Drilling
Can any of the company-specific risk be diversified away by investing in both Scientific Games and Major Drilling 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 Scientific Games and Major Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scientific Games and Major Drilling Group, you can compare the effects of market volatilities on Scientific Games and Major Drilling 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 Scientific Games with a short position of Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scientific Games and Major Drilling.
Diversification Opportunities for Scientific Games and Major Drilling
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scientific and Major is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group and Scientific Games 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 Scientific Games are associated (or correlated) with Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of Scientific Games i.e., Scientific Games and Major Drilling go up and down completely randomly.
Pair Corralation between Scientific Games and Major Drilling
Assuming the 90 days horizon Scientific Games is expected to generate 0.92 times more return on investment than Major Drilling. However, Scientific Games is 1.09 times less risky than Major Drilling. It trades about 0.05 of its potential returns per unit of risk. Major Drilling Group is currently generating about 0.04 per unit of risk. If you would invest 7,250 in Scientific Games on September 1, 2024 and sell it today you would earn a total of 1,850 from holding Scientific Games or generate 25.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scientific Games vs. Major Drilling Group
Performance |
| Timeline |
| Scientific Games |
| Major Drilling Group |
Scientific Games and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scientific Games and Major Drilling
The main advantage of trading using opposite Scientific Games and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scientific Games position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.| Scientific Games vs. InterContinental Hotels Group | Scientific Games vs. Marie Brizard Wine | Scientific Games vs. Hyatt Hotels | Scientific Games vs. HYATT HOTELS A |
| Major Drilling vs. BHP Group Limited | Major Drilling vs. Rio Tinto Group | Major Drilling vs. Rio Tinto Group | Major Drilling vs. Vale SA |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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