Correlation Between Dow Jones and SCOR PK
Can any of the company-specific risk be diversified away by investing in both Dow Jones and SCOR PK 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 Dow Jones and SCOR PK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and SCOR PK, you can compare the effects of market volatilities on Dow Jones and SCOR PK 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 Dow Jones with a short position of SCOR PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SCOR PK.
Diversification Opportunities for Dow Jones and SCOR PK
Poor diversification
The 3 months correlation between Dow and SCOR is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SCOR PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR PK and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with SCOR PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR PK has no effect on the direction of Dow Jones i.e., Dow Jones and SCOR PK go up and down completely randomly.
Pair Corralation between Dow Jones and SCOR PK
Assuming the 90 days trading horizon Dow Jones is expected to generate 5.67 times less return on investment than SCOR PK. But when comparing it to its historical volatility, Dow Jones Industrial is 3.09 times less risky than SCOR PK. It trades about 0.15 of its potential returns per unit of risk. SCOR PK is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 216.00 in SCOR PK on August 24, 2024 and sell it today you would earn a total of 41.00 from holding SCOR PK or generate 18.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. SCOR PK
Performance |
| Timeline |
Dow Jones and SCOR PK Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SCOR PK
Pair trading matchups for SCOR PK
Pair Trading with Dow Jones and SCOR PK
The main advantage of trading using opposite Dow Jones and SCOR PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, SCOR PK 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 PK will offset losses from the drop in SCOR PK's long position.| Dow Jones vs. Barrick Gold Corp | Dow Jones vs. Jutal Offshore Oil | Dow Jones vs. Eastern Co | Dow Jones vs. Weyco Group |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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