Correlation Between Equity Commonwealth and SCOR SE

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

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

Diversification Opportunities for Equity Commonwealth and SCOR SE

-0.63

Correlation Coefficient

Equity Commonwealth  SCOR SE

Excellent diversification

The 3 months correlation between Equity and SCOR is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Equity Commonwealth and SCOR SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR SE and Equity Commonwealth 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 Equity Commonwealth are associated (or correlated) with SCOR SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR SE has no effect on the direction of Equity Commonwealth i.e., Equity Commonwealth and SCOR SE go up and down completely randomly.

Pair Corralation between Equity Commonwealth and SCOR SE

Considering the 90-day investment horizon Equity Commonwealth is expected to generate 1.34 times more return on investment than SCOR SE. However, Equity Commonwealth is 1.34 times more volatile than SCOR SE. It trades about 0.49 of its potential returns per unit of risk. SCOR SE is currently generating about 0.22 per unit of risk. If you would invest  150.00  in Equity Commonwealth on October 9, 2024 and sell it today you would earn a total of  36.00  from holding Equity Commonwealth or generate 24.0% return on investment over 90 days.

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

Equity Commonwealth  vs.  SCOR SE

Equity Commonwealth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equity Commonwealth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

SCOR SE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SCOR SE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Equity Commonwealth and SCOR SE

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

The idea behind Equity Commonwealth and SCOR SE 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.