Correlation Between Mesabi Trust and SCCB

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

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

Diversification Opportunities for Mesabi Trust and SCCB

0.86

Correlation Coefficient

Mesabi Trust  SCCB

Very poor diversification

The 3 months correlation between Mesabi and SCCB is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Mesabi Trust and SCCB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCCB and Mesabi Trust 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 Mesabi Trust are associated (or correlated) with SCCB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCCB has no effect on the direction of Mesabi Trust i.e., Mesabi Trust and SCCB go up and down completely randomly.

Pair Corralation between Mesabi Trust and SCCB

If you would invest  1,695  in Mesabi Trust on October 3, 2024 and sell it today you would earn a total of  1,116  from holding Mesabi Trust or generate 65.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.19%
Values	Daily Returns

Mesabi Trust  vs.  SCCB

Mesabi Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mesabi Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesabi Trust sustained solid returns over the last few months and may actually be approaching a breakup point.

SCCB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCCB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, SCCB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mesabi Trust and SCCB

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

The idea behind Mesabi Trust and SCCB 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.