Correlation Between Bright Scholar and Scilex Holding
Can any of the company-specific risk be diversified away by investing in both Bright Scholar 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 Bright Scholar and Scilex Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bright Scholar Education and Scilex Holding, you can compare the effects of market volatilities on Bright Scholar 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 Bright Scholar with a short position of Scilex Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and Scilex Holding.
Diversification Opportunities for Bright Scholar and Scilex Holding
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bright and Scilex is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Scilex Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scilex Holding and Bright Scholar 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 Bright Scholar Education 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 Bright Scholar i.e., Bright Scholar and Scilex Holding go up and down completely randomly.
Pair Corralation between Bright Scholar and Scilex Holding
Given the investment horizon of 90 days Bright Scholar Education is expected to under-perform the Scilex Holding. But the stock apears to be less risky and, when comparing its historical volatility, Bright Scholar Education is 8.47 times less risky than Scilex Holding. The stock trades about -0.01 of its potential returns per unit of risk. The Scilex Holding is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Scilex Holding on August 29, 2024 and sell it today you would lose (1.00) from holding Scilex Holding or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Bright Scholar Education vs. Scilex Holding
Performance |
| Timeline |
| Bright Scholar Education |
| Scilex Holding |
Bright Scholar and Scilex Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Scholar and Scilex Holding
The main advantage of trading using opposite Bright Scholar and Scilex Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Scholar 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 Bright Scholar Education 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.| Scilex Holding vs. Vince Holding Corp | Scilex Holding vs. Citi Trends | Scilex Holding vs. Under Armour C | Scilex Holding vs. SEI Investments |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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