Correlation Between SCOR PK and Xtrackers

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

By analyzing existing cross correlation between SCOR PK and Xtrackers SP 500, you can compare the effects of market volatilities on SCOR PK and Xtrackers 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 SCOR PK with a short position of Xtrackers. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Xtrackers.

Diversification Opportunities for SCOR PK and Xtrackers

0.73

Correlation Coefficient

SCOR PK  Xtrackers

Poor diversification

The 3 months correlation between SCOR and Xtrackers is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Xtrackers SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers SP 500 and SCOR PK 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 SCOR PK are associated (or correlated) with Xtrackers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers SP 500 has no effect on the direction of SCOR PK i.e., SCOR PK and Xtrackers go up and down completely randomly.

Pair Corralation between SCOR PK and Xtrackers

Assuming the 90 days horizon SCOR PK is expected to generate 3.74 times more return on investment than Xtrackers. However, SCOR PK is 3.74 times more volatile than Xtrackers SP 500. It trades about 0.04 of its potential returns per unit of risk. Xtrackers SP 500 is currently generating about 0.13 per unit of risk. If you would invest  189.00  in SCOR PK on October 5, 2024 and sell it today you would earn a total of  58.00  from holding SCOR PK or generate 30.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.12%
Values	Daily Returns

SCOR PK  vs.  Xtrackers SP 500

SCOR PK

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 7 (%) 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.

Xtrackers SP 500

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers SP 500 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Xtrackers is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SCOR PK and Xtrackers

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

The idea behind SCOR PK and Xtrackers SP 500 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.