Correlation Between Stonex and Scully Royalty

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

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

Diversification Opportunities for Stonex and Scully Royalty

0.0

Correlation Coefficient

Stonex  Scully Royalty

Pay attention - limited upside

The 3 months correlation between Stonex and Scully is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stonex Group and Scully Royalty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scully Royalty and Stonex 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 Stonex Group are associated (or correlated) with Scully Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scully Royalty has no effect on the direction of Stonex i.e., Stonex and Scully Royalty go up and down completely randomly.

Pair Corralation between Stonex and Scully Royalty

Given the investment horizon of 90 days Stonex is expected to generate 1.44 times less return on investment than Scully Royalty. But when comparing it to its historical volatility, Stonex Group is 2.05 times less risky than Scully Royalty. It trades about 0.11 of its potential returns per unit of risk. Scully Royalty is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  670.00  in Scully Royalty on December 28, 2024 and sell it today you would earn a total of  131.00  from holding Scully Royalty or generate 19.55% return on investment over 90 days.

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

Stonex Group  vs.  Scully Royalty

Stonex Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stonex Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Stonex showed solid returns over the last few months and may actually be approaching a breakup point.

Scully Royalty

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Scully Royalty are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Scully Royalty disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stonex and Scully Royalty

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

The idea behind Stonex Group and Scully Royalty 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.