Correlation Between SCOR PK and Innovator

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Can any of the company-specific risk be diversified away by investing in both SCOR PK and Innovator 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 Innovator into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOR PK and Innovator 20 Year, you can compare the effects of market volatilities on SCOR PK and Innovator 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 Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Innovator.

Diversification Opportunities for SCOR PK and Innovator

-0.18
  Correlation Coefficient

Good diversification

The 3 months correlation between SCOR and Innovator is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Innovator 20 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator 20 Year 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 Innovator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator 20 Year has no effect on the direction of SCOR PK i.e., SCOR PK and Innovator go up and down completely randomly.

Pair Corralation between SCOR PK and Innovator

Assuming the 90 days horizon SCOR PK is expected to generate 4.63 times more return on investment than Innovator. However, SCOR PK is 4.63 times more volatile than Innovator 20 Year. It trades about 0.09 of its potential returns per unit of risk. Innovator 20 Year is currently generating about -0.13 per unit of risk. If you would invest  216.00  in SCOR PK on October 5, 2024 and sell it today you would earn a total of  31.00  from holding SCOR PK or generate 14.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SCOR PK  vs.  Innovator 20 Year

 Performance 
       Timeline  
SCOR PK 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
Insignificant
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.
Innovator 20 Year 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Innovator 20 Year has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking indicators, Innovator is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

SCOR PK and Innovator Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SCOR PK and Innovator

The main advantage of trading using opposite SCOR PK and Innovator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR PK position performs unexpectedly, Innovator 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 Innovator will offset losses from the drop in Innovator's long position.
The idea behind SCOR PK and Innovator 20 Year 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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