Correlation Between Masco and Schweiter Technologies

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

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

Diversification Opportunities for Masco and Schweiter Technologies

0.0

Correlation Coefficient

Masco  Schweiter Technologies

Pay attention - limited upside

The 3 months correlation between Masco and Schweiter is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Masco and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies and Masco 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 Masco are associated (or correlated) with Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of Masco i.e., Masco and Schweiter Technologies go up and down completely randomly.

Pair Corralation between Masco and Schweiter Technologies

If you would invest  7,388  in Masco on October 23, 2024 and sell it today you would earn a total of  503.00  from holding Masco or generate 6.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Masco  vs.  Schweiter Technologies AG

Masco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Masco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Masco is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Schweiter Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schweiter Technologies AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Schweiter Technologies is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Masco and Schweiter Technologies

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

The idea behind Masco and Schweiter Technologies AG 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.