Correlation Between Montea Comm and SCOTT TECHNOLOGY

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

By analyzing existing cross correlation between Montea Comm VA and SCOTT TECHNOLOGY, you can compare the effects of market volatilities on Montea Comm and SCOTT TECHNOLOGY 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 Montea Comm with a short position of SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montea Comm and SCOTT TECHNOLOGY.

Diversification Opportunities for Montea Comm and SCOTT TECHNOLOGY

-0.52

Correlation Coefficient

Montea Comm  SCOTT TECHNOLOGY

Excellent diversification

The 3 months correlation between Montea and SCOTT is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Montea Comm VA and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY and Montea Comm 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 Montea Comm VA are associated (or correlated) with SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of Montea Comm i.e., Montea Comm and SCOTT TECHNOLOGY go up and down completely randomly.

Pair Corralation between Montea Comm and SCOTT TECHNOLOGY

Assuming the 90 days horizon Montea Comm is expected to generate 1.92 times less return on investment than SCOTT TECHNOLOGY. But when comparing it to its historical volatility, Montea Comm VA is 1.77 times less risky than SCOTT TECHNOLOGY. It trades about 0.11 of its potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  120.00  in SCOTT TECHNOLOGY on October 25, 2024 and sell it today you would earn a total of  5.00  from holding SCOTT TECHNOLOGY or generate 4.17% return on investment over 90 days.

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

Montea Comm VA  vs.  SCOTT TECHNOLOGY

Montea Comm VA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Montea Comm VA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SCOTT TECHNOLOGY

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SCOTT TECHNOLOGY are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, SCOTT TECHNOLOGY exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Montea Comm and SCOTT TECHNOLOGY

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

The idea behind Montea Comm VA and SCOTT TECHNOLOGY 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.