Correlation Between Global Lights and SCOR PK
Can any of the company-specific risk be diversified away by investing in both Global Lights 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 Global Lights and SCOR PK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Lights Acquisition and SCOR PK, you can compare the effects of market volatilities on Global Lights 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 Global Lights with a short position of SCOR PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Lights and SCOR PK.
Diversification Opportunities for Global Lights and SCOR PK
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and SCOR is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Global Lights Acquisition and SCOR PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR PK and Global Lights 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 Global Lights Acquisition 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 Global Lights i.e., Global Lights and SCOR PK go up and down completely randomly.
Pair Corralation between Global Lights and SCOR PK
Given the investment horizon of 90 days Global Lights is expected to generate 3.3 times less return on investment than SCOR PK. But when comparing it to its historical volatility, Global Lights Acquisition is 19.06 times less risky than SCOR PK. It trades about 0.14 of its potential returns per unit of risk. SCOR PK is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 222.00 in SCOR PK on October 9, 2024 and sell it today you would earn a total of 31.00 from holding SCOR PK or generate 13.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 55.49% |
| Values | Daily Returns |
Global Lights Acquisition vs. SCOR PK
Performance |
| Timeline |
| Global Lights Acquisition |
| SCOR PK |
Global Lights and SCOR PK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Lights and SCOR PK
The main advantage of trading using opposite Global Lights and SCOR PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Lights 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.| Global Lights vs. KKR Co LP | Global Lights vs. Blackstone Group | Global Lights vs. T Rowe Price | Global Lights vs. Apollo Global Management |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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