Correlation Between Transcontinental and Scilex Holding

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

By analyzing existing cross correlation between Transcontinental Realty Investors and Scilex Holding, you can compare the effects of market volatilities on Transcontinental and Scilex Holding 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 Transcontinental with a short position of Scilex Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcontinental and Scilex Holding.

Diversification Opportunities for Transcontinental and Scilex Holding

-0.36

Correlation Coefficient

Transcontinental  Scilex Holding

Very good diversification

The 3 months correlation between Transcontinental and Scilex is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Transcontinental Realty Invest and Scilex Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scilex Holding and Transcontinental 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 Transcontinental Realty Investors are associated (or correlated) with Scilex Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scilex Holding has no effect on the direction of Transcontinental i.e., Transcontinental and Scilex Holding go up and down completely randomly.

Pair Corralation between Transcontinental and Scilex Holding

Considering the 90-day investment horizon Transcontinental Realty Investors is expected to under-perform the Scilex Holding. But the stock apears to be less risky and, when comparing its historical volatility, Transcontinental Realty Investors is 8.22 times less risky than Scilex Holding. The stock trades about -0.05 of its potential returns per unit of risk. The Scilex Holding is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Scilex Holding on October 10, 2024 and sell it today you would lose (10.00) from holding Scilex Holding or give up 33.33% of portfolio value over 90 days.

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

Transcontinental Realty Invest  vs.  Scilex Holding

Transcontinental Realty

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transcontinental Realty Investors are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Transcontinental is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Scilex Holding

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Scilex Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Scilex Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transcontinental and Scilex Holding

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

The idea behind Transcontinental Realty Investors and Scilex Holding 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.