Correlation Between IShares MSCI and SCOR PK

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

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

Diversification Opportunities for IShares MSCI and SCOR PK

0.57

Correlation Coefficient

IShares MSCI  SCOR PK

Very weak diversification

The 3 months correlation between IShares and SCOR is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI USA and SCOR PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR PK and IShares MSCI 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 iShares MSCI USA 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 IShares MSCI i.e., IShares MSCI and SCOR PK go up and down completely randomly.

Pair Corralation between IShares MSCI and SCOR PK

Given the investment horizon of 90 days IShares MSCI is expected to generate 5.83 times less return on investment than SCOR PK. But when comparing it to its historical volatility, iShares MSCI USA is 3.86 times less risky than SCOR PK. It trades about 0.12 of its potential returns per unit of risk. SCOR PK is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  221.00  in SCOR PK on August 30, 2024 and sell it today you would earn a total of  25.00  from holding SCOR PK or generate 11.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

iShares MSCI USA  vs.  SCOR PK

iShares MSCI USA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI USA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, IShares MSCI is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

SCOR PK

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 10 (%) 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 IShares MSCI and SCOR PK

The main advantage of trading using opposite IShares MSCI and SCOR PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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 iShares MSCI USA 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.