Correlation Between Scully Royalty and Garden Stage

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

By analyzing existing cross correlation between Scully Royalty and Garden Stage Limited, you can compare the effects of market volatilities on Scully Royalty and Garden Stage 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 Garden Stage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scully Royalty and Garden Stage.

Diversification Opportunities for Scully Royalty and Garden Stage

-0.08

Correlation Coefficient

Scully Royalty  Garden Stage

Good diversification

The 3 months correlation between Scully and Garden is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Scully Royalty and Garden Stage Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garden Stage Limited 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 Garden Stage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garden Stage Limited has no effect on the direction of Scully Royalty i.e., Scully Royalty and Garden Stage go up and down completely randomly.

Pair Corralation between Scully Royalty and Garden Stage

Considering the 90-day investment horizon Scully Royalty is expected to generate 0.35 times more return on investment than Garden Stage. However, Scully Royalty is 2.85 times less risky than Garden Stage. It trades about -0.17 of its potential returns per unit of risk. Garden Stage Limited is currently generating about -0.16 per unit of risk. If you would invest  793.00  in Scully Royalty on September 13, 2024 and sell it today you would lose (73.00) from holding Scully Royalty or give up 9.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Scully Royalty  vs.  Garden Stage Limited

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.

Garden Stage Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Garden Stage Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Garden Stage showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scully Royalty and Garden Stage

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

The idea behind Scully Royalty and Garden Stage Limited 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.