Correlation Between Masterwork Machinery and SICC

Can any of the company-specific risk be diversified away by investing in both Masterwork Machinery and SICC 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 Masterwork Machinery and SICC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Masterwork Machinery and SICC Co, you can compare the effects of market volatilities on Masterwork Machinery and SICC 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 Masterwork Machinery with a short position of SICC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masterwork Machinery and SICC.

Diversification Opportunities for Masterwork Machinery and SICC

0.88

Correlation Coefficient

Masterwork Machinery  SICC

Very poor diversification

The 3 months correlation between Masterwork and SICC is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Masterwork Machinery and SICC Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SICC and Masterwork Machinery 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 Masterwork Machinery are associated (or correlated) with SICC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SICC has no effect on the direction of Masterwork Machinery i.e., Masterwork Machinery and SICC go up and down completely randomly.

Pair Corralation between Masterwork Machinery and SICC

Assuming the 90 days trading horizon Masterwork Machinery is expected to generate 1.09 times less return on investment than SICC. In addition to that, Masterwork Machinery is 1.09 times more volatile than SICC Co. It trades about 0.07 of its total potential returns per unit of risk. SICC Co is currently generating about 0.08 per unit of volatility. If you would invest  5,636  in SICC Co on December 26, 2024 and sell it today you would earn a total of  838.00  from holding SICC Co or generate 14.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.28%
Values	Daily Returns

Masterwork Machinery  vs.  SICC Co

Masterwork Machinery

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Masterwork Machinery are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Masterwork Machinery sustained solid returns over the last few months and may actually be approaching a breakup point.

SICC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SICC Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SICC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Masterwork Machinery and SICC

The main advantage of trading using opposite Masterwork Machinery and SICC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masterwork Machinery position performs unexpectedly, SICC 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 SICC will offset losses from the drop in SICC's long position.

The idea behind Masterwork Machinery and SICC Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.