Correlation Between CreditRiskMonitor and Scully Royalty

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

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

Diversification Opportunities for CreditRiskMonitor and Scully Royalty

-0.56

Correlation Coefficient

CreditRiskMonitor  Scully Royalty

Excellent diversification

The 3 months correlation between CreditRiskMonitor and Scully is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding CreditRiskMonitorCom and Scully Royalty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scully Royalty and CreditRiskMonitor 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 CreditRiskMonitorCom are associated (or correlated) with Scully Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scully Royalty has no effect on the direction of CreditRiskMonitor i.e., CreditRiskMonitor and Scully Royalty go up and down completely randomly.

Pair Corralation between CreditRiskMonitor and Scully Royalty

Given the investment horizon of 90 days CreditRiskMonitorCom is expected to generate 1.38 times more return on investment than Scully Royalty. However, CreditRiskMonitor is 1.38 times more volatile than Scully Royalty. It trades about 0.21 of its potential returns per unit of risk. Scully Royalty is currently generating about -0.02 per unit of risk. If you would invest  228.00  in CreditRiskMonitorCom on September 2, 2024 and sell it today you would earn a total of  117.00  from holding CreditRiskMonitorCom or generate 51.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CreditRiskMonitorCom  vs.  Scully Royalty

CreditRiskMonitorCom

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CreditRiskMonitorCom are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile primary indicators, CreditRiskMonitor showed solid returns over the last few months and may actually be approaching a breakup point.

Scully Royalty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scully Royalty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Scully Royalty is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CreditRiskMonitor and Scully Royalty

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

The idea behind CreditRiskMonitorCom and Scully Royalty 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.