Correlation Between Navigator Equity and SCOR PK

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

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

Diversification Opportunities for Navigator Equity and SCOR PK

0.0

Correlation Coefficient

Navigator Equity  SCOR PK

Pay attention - limited upside

The 3 months correlation between Navigator and SCOR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Navigator Equity Hedged and SCOR PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR PK and Navigator Equity 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 Navigator Equity Hedged 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 Navigator Equity i.e., Navigator Equity and SCOR PK go up and down completely randomly.

Pair Corralation between Navigator Equity and SCOR PK

Assuming the 90 days horizon Navigator Equity Hedged is expected to generate 0.8 times more return on investment than SCOR PK. However, Navigator Equity Hedged is 1.25 times less risky than SCOR PK. It trades about 0.06 of its potential returns per unit of risk. SCOR PK is currently generating about 0.03 per unit of risk. If you would invest  2,776  in Navigator Equity Hedged on December 3, 2024 and sell it today you would earn a total of  926.00  from holding Navigator Equity Hedged or generate 33.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	53.58%
Values	Daily Returns

Navigator Equity Hedged  vs.  SCOR PK

Navigator Equity Hedged

Risk-Adjusted Performance

Very Weak

Over the last 90 days Navigator Equity Hedged has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Navigator Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SCOR PK

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SCOR PK may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Navigator Equity and SCOR PK

The main advantage of trading using opposite Navigator Equity and SCOR PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navigator Equity 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 Navigator Equity Hedged 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.