Correlation Between Jefferies Financial and Scully Royalty

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

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

Diversification Opportunities for Jefferies Financial and Scully Royalty

-0.23

Correlation Coefficient

Jefferies Financial  Scully Royalty

Very good diversification

The 3 months correlation between Jefferies and Scully is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Jefferies Financial Group and Scully Royalty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scully Royalty and Jefferies Financial 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 Jefferies Financial Group 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 Jefferies Financial i.e., Jefferies Financial and Scully Royalty go up and down completely randomly.

Pair Corralation between Jefferies Financial and Scully Royalty

Considering the 90-day investment horizon Jefferies Financial Group is expected to under-perform the Scully Royalty. But the stock apears to be less risky and, when comparing its historical volatility, Jefferies Financial Group is 1.76 times less risky than Scully Royalty. The stock trades about -0.22 of its potential returns per unit of risk. The Scully Royalty is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  670.00  in Scully Royalty on December 29, 2024 and sell it today you would earn a total of  131.00  from holding Scully Royalty or generate 19.55% return on investment over 90 days.

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

Jefferies Financial Group  vs.  Scully Royalty

Jefferies Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jefferies Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Scully Royalty

Risk-Adjusted Performance

Modest

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

Pair Trading with Jefferies Financial and Scully Royalty

The main advantage of trading using opposite Jefferies Financial and Scully Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jefferies Financial 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 Jefferies Financial Group 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.