Correlation Between US Physical and Scientific Games
Can any of the company-specific risk be diversified away by investing in both US Physical and Scientific Games 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 US Physical and Scientific Games into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Physical Therapy and Scientific Games, you can compare the effects of market volatilities on US Physical and Scientific Games 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 US Physical with a short position of Scientific Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Physical and Scientific Games.
Diversification Opportunities for US Physical and Scientific Games
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UPH and Scientific is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding US Physical Therapy and Scientific Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Games and US Physical 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 US Physical Therapy are associated (or correlated) with Scientific Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Games has no effect on the direction of US Physical i.e., US Physical and Scientific Games go up and down completely randomly.
Pair Corralation between US Physical and Scientific Games
Assuming the 90 days horizon US Physical Therapy is expected to generate 0.98 times more return on investment than Scientific Games. However, US Physical Therapy is 1.02 times less risky than Scientific Games. It trades about -0.09 of its potential returns per unit of risk. Scientific Games is currently generating about -0.31 per unit of risk. If you would invest 8,750 in US Physical Therapy on October 14, 2024 and sell it today you would lose (200.00) from holding US Physical Therapy or give up 2.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Physical Therapy vs. Scientific Games
Performance |
| Timeline |
| US Physical Therapy |
| Scientific Games |
US Physical and Scientific Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Physical and Scientific Games
The main advantage of trading using opposite US Physical and Scientific Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Physical position performs unexpectedly, Scientific Games 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 Scientific Games will offset losses from the drop in Scientific Games' long position.| US Physical vs. COVIVIO HOTELS INH | US Physical vs. Forsys Metals Corp | US Physical vs. MHP Hotel AG | US Physical vs. De Grey Mining |
| Scientific Games vs. US Physical Therapy | Scientific Games vs. Canadian Utilities Limited | Scientific Games vs. NORTHEAST UTILITIES | Scientific Games vs. Acadia Healthcare |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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