Correlation Between Scout E and Sit Developing

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

By analyzing existing cross correlation between Scout E Bond and Sit Developing Markets, you can compare the effects of market volatilities on Scout E and Sit Developing 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 Scout E with a short position of Sit Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scout E and Sit Developing.

Diversification Opportunities for Scout E and Sit Developing

-0.07

Correlation Coefficient

Scout E  Sit Developing

Good diversification

The 3 months correlation between Scout and Sit is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Scout E Bond and Sit Developing Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Developing Markets and Scout E 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 Scout E Bond are associated (or correlated) with Sit Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Developing Markets has no effect on the direction of Scout E i.e., Scout E and Sit Developing go up and down completely randomly.

Pair Corralation between Scout E and Sit Developing

Assuming the 90 days horizon Scout E is expected to generate 2.94 times less return on investment than Sit Developing. But when comparing it to its historical volatility, Scout E Bond is 4.57 times less risky than Sit Developing. It trades about 0.03 of its potential returns per unit of risk. Sit Developing Markets is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,743  in Sit Developing Markets on February 4, 2025 and sell it today you would earn a total of  25.00  from holding Sit Developing Markets or generate 1.43% return on investment over 90 days.

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

Scout E Bond  vs.  Sit Developing Markets

Scout E Bond

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Scout E Bond are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Scout E is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sit Developing Markets

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sit Developing Markets are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Sit Developing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Scout E and Sit Developing

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

The idea behind Scout E Bond and Sit Developing Markets 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 CEOs Directory module to screen CEOs from public companies around the world.