Correlation Between Scientific Industries and Mesabi Trust

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

By analyzing existing cross correlation between Scientific Industries and Mesabi Trust, you can compare the effects of market volatilities on Scientific Industries and Mesabi Trust 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 Scientific Industries with a short position of Mesabi Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scientific Industries and Mesabi Trust.

Diversification Opportunities for Scientific Industries and Mesabi Trust

-0.21

Correlation Coefficient

Scientific Industries  Mesabi Trust

Very good diversification

The 3 months correlation between Scientific and Mesabi is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Industries and Mesabi Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesabi Trust and Scientific Industries 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 Scientific Industries are associated (or correlated) with Mesabi Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesabi Trust has no effect on the direction of Scientific Industries i.e., Scientific Industries and Mesabi Trust go up and down completely randomly.

Pair Corralation between Scientific Industries and Mesabi Trust

Given the investment horizon of 90 days Scientific Industries is expected to generate 1.48 times less return on investment than Mesabi Trust. In addition to that, Scientific Industries is 3.37 times more volatile than Mesabi Trust. It trades about 0.01 of its total potential returns per unit of risk. Mesabi Trust is currently generating about 0.07 per unit of volatility. If you would invest  2,495  in Mesabi Trust on October 18, 2024 and sell it today you would earn a total of  205.00  from holding Mesabi Trust or generate 8.22% return on investment over 90 days.

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

Scientific Industries  vs.  Mesabi Trust

Scientific Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Scientific Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Scientific Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mesabi Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mesabi Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesabi Trust may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Scientific Industries and Mesabi Trust

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

The idea behind Scientific Industries and Mesabi Trust 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.