Correlation Between SCOR PK and Cambria Cannabis

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

By analyzing existing cross correlation between SCOR PK and Cambria Cannabis ETF, you can compare the effects of market volatilities on SCOR PK and Cambria Cannabis 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 Cambria Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Cambria Cannabis.

Diversification Opportunities for SCOR PK and Cambria Cannabis

-0.7

Correlation Coefficient

SCOR PK  Cambria Cannabis

Excellent diversification

The 3 months correlation between SCOR and Cambria is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Cambria Cannabis ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Cannabis ETF 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 Cambria Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Cannabis ETF has no effect on the direction of SCOR PK i.e., SCOR PK and Cambria Cannabis go up and down completely randomly.

Pair Corralation between SCOR PK and Cambria Cannabis

Assuming the 90 days horizon SCOR PK is expected to generate 1.16 times more return on investment than Cambria Cannabis. However, SCOR PK is 1.16 times more volatile than Cambria Cannabis ETF. It trades about 0.09 of its potential returns per unit of risk. Cambria Cannabis ETF is currently generating about -0.09 per unit of risk. If you would invest  214.00  in SCOR PK on September 16, 2024 and sell it today you would earn a total of  29.00  from holding SCOR PK or generate 13.55% return on investment over 90 days.

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

SCOR PK  vs.  Cambria Cannabis ETF

SCOR PK

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 6 (%) 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.

Cambria Cannabis ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambria Cannabis ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's forward-looking signals remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with SCOR PK and Cambria Cannabis

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

The idea behind SCOR PK and Cambria Cannabis ETF 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.