Correlation Between SCOTT TECHNOLOGY and Huntington Bancshares

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

By analyzing existing cross correlation between SCOTT TECHNOLOGY and Huntington Bancshares Incorporated, you can compare the effects of market volatilities on SCOTT TECHNOLOGY and Huntington Bancshares 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 Huntington Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOTT TECHNOLOGY and Huntington Bancshares.

Diversification Opportunities for SCOTT TECHNOLOGY and Huntington Bancshares

0.61

Correlation Coefficient

SCOTT TECHNOLOGY  Huntington Bancshares

Poor diversification

The 3 months correlation between SCOTT and Huntington is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and Huntington Bancshares Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Bancshares 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 Huntington Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Bancshares has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and Huntington Bancshares go up and down completely randomly.

Pair Corralation between SCOTT TECHNOLOGY and Huntington Bancshares

Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to under-perform the Huntington Bancshares. In addition to that, SCOTT TECHNOLOGY is 1.63 times more volatile than Huntington Bancshares Incorporated. It trades about -0.12 of its total potential returns per unit of risk. Huntington Bancshares Incorporated is currently generating about 0.23 per unit of volatility. If you would invest  1,563  in Huntington Bancshares Incorporated on October 22, 2024 and sell it today you would earn a total of  74.00  from holding Huntington Bancshares Incorporated or generate 4.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.12%
Values	Daily Returns

SCOTT TECHNOLOGY  vs.  Huntington Bancshares Incorpor

SCOTT TECHNOLOGY

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCOTT TECHNOLOGY are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, SCOTT TECHNOLOGY exhibited solid returns over the last few months and may actually be approaching a breakup point.

Huntington Bancshares

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with SCOTT TECHNOLOGY and Huntington Bancshares

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

The idea behind SCOTT TECHNOLOGY and Huntington Bancshares Incorporated 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.