Correlation Between Scully Royalty and PJT Partners

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

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

Diversification Opportunities for Scully Royalty and PJT Partners

0.5

Correlation Coefficient

Scully Royalty  PJT Partners

Very weak diversification

The 3 months correlation between Scully and PJT is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Scully Royalty and PJT Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJT Partners and Scully Royalty 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 Scully Royalty are associated (or correlated) with PJT Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJT Partners has no effect on the direction of Scully Royalty i.e., Scully Royalty and PJT Partners go up and down completely randomly.

Pair Corralation between Scully Royalty and PJT Partners

Considering the 90-day investment horizon Scully Royalty is expected to generate 4.35 times less return on investment than PJT Partners. In addition to that, Scully Royalty is 1.5 times more volatile than PJT Partners. It trades about 0.05 of its total potential returns per unit of risk. PJT Partners is currently generating about 0.35 per unit of volatility. If you would invest  12,840  in PJT Partners on July 16, 2024 and sell it today you would earn a total of  1,583  from holding PJT Partners or generate 12.33% return on investment over 90 days.

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

Scully Royalty  vs.  PJT Partners

Scully Royalty

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Scully Royalty are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Scully Royalty may actually be approaching a critical reversion point that can send shares even higher in November 2024.

PJT Partners

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PJT Partners are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting forward-looking indicators, PJT Partners unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scully Royalty and PJT Partners

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

The idea behind Scully Royalty and PJT Partners 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.