Correlation Between SCOTT TECHNOLOGY and Brown Forman

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both SCOTT TECHNOLOGY and Brown Forman 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 SCOTT TECHNOLOGY and Brown Forman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOTT TECHNOLOGY and Brown Forman, you can compare the effects of market volatilities on SCOTT TECHNOLOGY and Brown Forman 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 SCOTT TECHNOLOGY with a short position of Brown Forman. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOTT TECHNOLOGY and Brown Forman.

Diversification Opportunities for SCOTT TECHNOLOGY and Brown Forman

SCOTTBrownDiversified AwaySCOTTBrownDiversified Away100%
-0.49
  Correlation Coefficient

Very good diversification

The 3 months correlation between SCOTT and Brown is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and Brown Forman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Forman and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY are associated (or correlated) with Brown Forman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Forman has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and Brown Forman go up and down completely randomly.

Pair Corralation between SCOTT TECHNOLOGY and Brown Forman

Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to generate 1.36 times more return on investment than Brown Forman. However, SCOTT TECHNOLOGY is 1.36 times more volatile than Brown Forman. It trades about 0.06 of its potential returns per unit of risk. Brown Forman is currently generating about -0.14 per unit of risk. If you would invest  108.00  in SCOTT TECHNOLOGY on October 12, 2024 and sell it today you would earn a total of  10.00  from holding SCOTT TECHNOLOGY or generate 9.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

SCOTT TECHNOLOGY  vs.  Brown Forman

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -15-10-505101520
JavaScript chart by amCharts 3.21.15RZH BF5A
       Timeline  
SCOTT TECHNOLOGY 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in SCOTT TECHNOLOGY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, SCOTT TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan11.051.11.151.21.251.31.35
Brown Forman 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Brown Forman has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan343638404244

SCOTT TECHNOLOGY and Brown Forman Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.61-7.2-4.78-2.37-0.04022.384.847.39.7612.22 0.010.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15RZH BF5A
       Returns  

Pair Trading with SCOTT TECHNOLOGY and Brown Forman

The main advantage of trading using opposite SCOTT TECHNOLOGY and Brown Forman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY position performs unexpectedly, Brown Forman 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 Brown Forman will offset losses from the drop in Brown Forman's long position.
The idea behind SCOTT TECHNOLOGY and Brown Forman 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

Other Complementary Tools

Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities