Correlation Between CENTRICA ADR and SCOR SE
Can any of the company-specific risk be diversified away by investing in both CENTRICA ADR and SCOR SE 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 CENTRICA ADR and SCOR SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CENTRICA ADR NEW and SCOR SE, you can compare the effects of market volatilities on CENTRICA ADR and SCOR SE 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 CENTRICA ADR with a short position of SCOR SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTRICA ADR and SCOR SE.
Diversification Opportunities for CENTRICA ADR and SCOR SE
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CENTRICA and SCOR is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CENTRICA ADR NEW and SCOR SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR SE and CENTRICA ADR 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 CENTRICA ADR NEW are associated (or correlated) with SCOR SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR SE has no effect on the direction of CENTRICA ADR i.e., CENTRICA ADR and SCOR SE go up and down completely randomly.
Pair Corralation between CENTRICA ADR and SCOR SE
Assuming the 90 days trading horizon CENTRICA ADR NEW is expected to generate 1.02 times more return on investment than SCOR SE. However, CENTRICA ADR is 1.02 times more volatile than SCOR SE. It trades about 0.05 of its potential returns per unit of risk. SCOR SE is currently generating about 0.03 per unit of risk. If you would invest 389.00 in CENTRICA ADR NEW on November 5, 2024 and sell it today you would earn a total of 251.00 from holding CENTRICA ADR NEW or generate 64.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CENTRICA ADR NEW vs. SCOR SE
Performance |
| Timeline |
| CENTRICA ADR NEW |
| SCOR SE |
CENTRICA ADR and SCOR SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CENTRICA ADR and SCOR SE
The main advantage of trading using opposite CENTRICA ADR and SCOR SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CENTRICA ADR position performs unexpectedly, SCOR SE 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 SCOR SE will offset losses from the drop in SCOR SE's long position.| CENTRICA ADR vs. Siemens Energy AG | CENTRICA ADR vs. Vistra Corp | CENTRICA ADR vs. Datang International Power | CENTRICA ADR vs. Contact Energy Limited |
| SCOR SE vs. SIDETRADE EO 1 | SCOR SE vs. FAST RETAIL ADR | SCOR SE vs. Renesas Electronics | SCOR SE vs. KIMBALL ELECTRONICS |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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