Correlation Between SCOR PK and Vaughan Nelson

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

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

Diversification Opportunities for SCOR PK and Vaughan Nelson

-0.67

Correlation Coefficient

SCOR PK  Vaughan Nelson

Excellent diversification

The 3 months correlation between SCOR and Vaughan is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Vaughan Nelson Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaughan Nelson Value 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 Vaughan Nelson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaughan Nelson Value has no effect on the direction of SCOR PK i.e., SCOR PK and Vaughan Nelson go up and down completely randomly.

Pair Corralation between SCOR PK and Vaughan Nelson

Assuming the 90 days horizon SCOR PK is expected to generate 2.79 times more return on investment than Vaughan Nelson. However, SCOR PK is 2.79 times more volatile than Vaughan Nelson Value. It trades about 0.11 of its potential returns per unit of risk. Vaughan Nelson Value is currently generating about -0.06 per unit of risk. If you would invest  244.00  in SCOR PK on December 28, 2024 and sell it today you would earn a total of  50.00  from holding SCOR PK or generate 20.49% 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.  Vaughan Nelson Value

SCOR PK

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 8 (%) 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.

Vaughan Nelson Value

Risk-Adjusted Performance

Very Weak

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

Pair Trading with SCOR PK and Vaughan Nelson

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

The idea behind SCOR PK and Vaughan Nelson Value 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.