Correlation Between Scientific Games and POWER METALS
Can any of the company-specific risk be diversified away by investing in both Scientific Games and POWER METALS 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 POWER METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scientific Games and POWER METALS, you can compare the effects of market volatilities on Scientific Games and POWER METALS 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 POWER METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scientific Games and POWER METALS.
Diversification Opportunities for Scientific Games and POWER METALS
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Scientific and POWER is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and POWER METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POWER METALS 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 POWER METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POWER METALS has no effect on the direction of Scientific Games i.e., Scientific Games and POWER METALS go up and down completely randomly.
Pair Corralation between Scientific Games and POWER METALS
Assuming the 90 days horizon Scientific Games is expected to generate 1.61 times less return on investment than POWER METALS. But when comparing it to its historical volatility, Scientific Games is 2.47 times less risky than POWER METALS. It trades about 0.06 of its potential returns per unit of risk. POWER METALS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 21.00 in POWER METALS on September 13, 2024 and sell it today you would earn a total of 7.00 from holding POWER METALS or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scientific Games vs. POWER METALS
Performance |
| Timeline |
| Scientific Games |
| POWER METALS |
Scientific Games and POWER METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scientific Games and POWER METALS
The main advantage of trading using opposite Scientific Games and POWER METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scientific Games position performs unexpectedly, POWER METALS 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 POWER METALS will offset losses from the drop in POWER METALS's long position.| Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc |
| POWER METALS vs. PARKEN Sport Entertainment | POWER METALS vs. The Boston Beer | POWER METALS vs. China Resources Beer | POWER METALS vs. CVW CLEANTECH INC |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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