Correlation Between SCOTT TECHNOLOGY and Sysco

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

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

Diversification Opportunities for SCOTT TECHNOLOGY and Sysco

0.55

Correlation Coefficient

SCOTT TECHNOLOGY  Sysco

Very weak diversification

The 3 months correlation between SCOTT and Sysco is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and Sysco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysco 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 Sysco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sysco has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and Sysco go up and down completely randomly.

Pair Corralation between SCOTT TECHNOLOGY and Sysco

Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to generate 2.6 times more return on investment than Sysco. However, SCOTT TECHNOLOGY is 2.6 times more volatile than Sysco. It trades about 0.06 of its potential returns per unit of risk. Sysco is currently generating about 0.12 per unit of risk. If you would invest  111.00  in SCOTT TECHNOLOGY on October 8, 2024 and sell it today you would earn a total of  9.00  from holding SCOTT TECHNOLOGY or generate 8.11% return on investment over 90 days.

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

SCOTT TECHNOLOGY  vs.  Sysco

SCOTT TECHNOLOGY

Risk-Adjusted Performance

4 of 100

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 uncertain technical indicators, SCOTT TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sysco

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sysco are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Sysco may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SCOTT TECHNOLOGY and Sysco

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

The idea behind SCOTT TECHNOLOGY and Sysco 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.