Correlation Between Dow Jones and SCOR SE
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and SCOR SE 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 SE, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of SCOR SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SCOR SE.
Diversification Opportunities for Dow Jones and SCOR SE
Weak diversification
The 3 months correlation between Dow and SCOR is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SCOR SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR SE 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 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 Dow Jones i.e., Dow Jones and SCOR SE go up and down completely randomly.
Pair Corralation between Dow Jones and SCOR SE
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.28 times less return on investment than SCOR SE. But when comparing it to its historical volatility, Dow Jones Industrial is 3.34 times less risky than SCOR SE. It trades about 0.07 of its potential returns per unit of risk. SCOR SE is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,075 in SCOR SE on October 12, 2024 and sell it today you would earn a total of 411.00 from holding SCOR SE or generate 19.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Dow Jones Industrial vs. SCOR SE
Performance |
| Timeline |
Dow Jones and SCOR SE Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SCOR SE
Pair trading matchups for SCOR SE
Pair Trading with Dow Jones and SCOR SE
The main advantage of trading using opposite Dow Jones and SCOR SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Lululemon Athletica | Dow Jones vs. Vistra Energy Corp | Dow Jones vs. The Gap, | Dow Jones vs. Pool Corporation |
| SCOR SE vs. WIMFARM SA EO | SCOR SE vs. Firan Technology Group | SCOR SE vs. Casio Computer CoLtd | SCOR SE vs. AGRICULTBK HADR25 YC |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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