Correlation Between Raymond James and Scully Royalty

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

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

Diversification Opportunities for Raymond James and Scully Royalty

-0.44

Correlation Coefficient

Raymond James  Scully Royalty

Very good diversification

The 3 months correlation between Raymond and Scully is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Raymond James Financial and Scully Royalty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scully Royalty and Raymond James 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 Raymond James Financial 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 Raymond James i.e., Raymond James and Scully Royalty go up and down completely randomly.

Pair Corralation between Raymond James and Scully Royalty

Assuming the 90 days trading horizon Raymond James Financial is expected to generate 0.04 times more return on investment than Scully Royalty. However, Raymond James Financial is 24.3 times less risky than Scully Royalty. It trades about 0.35 of its potential returns per unit of risk. Scully Royalty is currently generating about -0.17 per unit of risk. If you would invest  2,519  in Raymond James Financial on September 13, 2024 and sell it today you would earn a total of  19.00  from holding Raymond James Financial or generate 0.75% return on investment over 90 days.

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

Raymond James Financial  vs.  Scully Royalty

Raymond James Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Raymond James Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Raymond James is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Scully Royalty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scully Royalty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Scully Royalty is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Raymond James and Scully Royalty

The main advantage of trading using opposite Raymond James and Scully Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raymond James 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 Raymond James Financial 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.