Correlation Between Cingulate Warrants and Scilex Holding

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

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

Diversification Opportunities for Cingulate Warrants and Scilex Holding

-0.26

Correlation Coefficient

Cingulate Warrants  Scilex Holding

Very good diversification

The 3 months correlation between Cingulate and Scilex is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cingulate Warrants and Scilex Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scilex Holding and Cingulate Warrants 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 Cingulate Warrants are associated (or correlated) with Scilex Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scilex Holding has no effect on the direction of Cingulate Warrants i.e., Cingulate Warrants and Scilex Holding go up and down completely randomly.

Pair Corralation between Cingulate Warrants and Scilex Holding

Assuming the 90 days horizon Cingulate Warrants is expected to generate 1.08 times less return on investment than Scilex Holding. But when comparing it to its historical volatility, Cingulate Warrants is 1.01 times less risky than Scilex Holding. It trades about 0.07 of its potential returns per unit of risk. Scilex Holding is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Scilex Holding on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Scilex Holding or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Cingulate Warrants  vs.  Scilex Holding

Cingulate Warrants

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cingulate Warrants are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Cingulate Warrants showed solid returns over the last few months and may actually be approaching a breakup point.

Scilex Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Scilex Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Scilex Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cingulate Warrants and Scilex Holding

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

The idea behind Cingulate Warrants and Scilex Holding 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .