Correlation Between Global X and SCOR PK

Can any of the company-specific risk be diversified away by investing in both Global X and SCOR PK 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 Global X and SCOR PK into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Global X and SCOR PK

0.47

Correlation Coefficient

Global X  SCOR PK

Very weak diversification

The 3 months correlation between Global and SCOR is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Global X and SCOR PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR PK and Global X 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 Global X are associated (or correlated) with SCOR PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR PK has no effect on the direction of Global X i.e., Global X and SCOR PK go up and down completely randomly.

Pair Corralation between Global X and SCOR PK

Given the investment horizon of 90 days Global X is expected to generate 53.66 times more return on investment than SCOR PK. However, Global X is 53.66 times more volatile than SCOR PK. It trades about 0.13 of its potential returns per unit of risk. SCOR PK is currently generating about 0.11 per unit of risk. If you would invest  2,386  in Global X on December 28, 2024 and sell it today you would lose (2,351) from holding Global X or give up 98.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	60.0%
Values	Daily Returns

Global X  vs.  SCOR PK

Global X

Risk-Adjusted Performance

OK

Over the last 90 days Global X has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak fundamental indicators, Global X exhibited solid returns over the last few months and may actually be approaching a breakup point.

SCOR PK

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SCOR PK showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and SCOR PK

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

The idea behind Global X and SCOR PK 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.