Correlation Between SCOTT TECHNOLOGY and Wayside Technology

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

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

Diversification Opportunities for SCOTT TECHNOLOGY and Wayside Technology

0.35

Correlation Coefficient

SCOTT TECHNOLOGY  Wayside Technology

Weak diversification

The 3 months correlation between SCOTT and Wayside is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and Wayside Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayside Technology 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 Wayside Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayside Technology has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and Wayside Technology go up and down completely randomly.

Pair Corralation between SCOTT TECHNOLOGY and Wayside Technology

Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to generate 12.26 times less return on investment than Wayside Technology. In addition to that, SCOTT TECHNOLOGY is 1.02 times more volatile than Wayside Technology Group. It trades about 0.01 of its total potential returns per unit of risk. Wayside Technology Group is currently generating about 0.11 per unit of volatility. If you would invest  3,024  in Wayside Technology Group on September 4, 2024 and sell it today you would earn a total of  9,576  from holding Wayside Technology Group or generate 316.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SCOTT TECHNOLOGY  vs.  Wayside Technology Group

SCOTT TECHNOLOGY

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCOTT TECHNOLOGY are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, SCOTT TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Wayside Technology

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wayside Technology Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Wayside Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SCOTT TECHNOLOGY and Wayside Technology

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

The idea behind SCOTT TECHNOLOGY and Wayside Technology Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.