Correlation Between SCOTT TECHNOLOGY and Brown Forman
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
-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 Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SCOTT TECHNOLOGY vs. Brown Forman
Performance |
Timeline |
SCOTT TECHNOLOGY |
Brown Forman |
SCOTT TECHNOLOGY and Brown Forman Volatility Contrast
Predicted Return Density |
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.SCOTT TECHNOLOGY vs. CITIC Telecom International | ||
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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.
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