Correlation Between Icade SA and SCOR SE
Can any of the company-specific risk be diversified away by investing in both Icade SA 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 Icade SA and SCOR SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icade SA and SCOR SE, you can compare the effects of market volatilities on Icade SA 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 Icade SA with a short position of SCOR SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icade SA and SCOR SE.
Diversification Opportunities for Icade SA and SCOR SE
Good diversification
The 3 months correlation between Icade and SCOR is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Icade SA and SCOR SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR SE and Icade SA 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 Icade SA 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 Icade SA i.e., Icade SA and SCOR SE go up and down completely randomly.
Pair Corralation between Icade SA and SCOR SE
Assuming the 90 days trading horizon Icade SA is expected to under-perform the SCOR SE. But the stock apears to be less risky and, when comparing its historical volatility, Icade SA is 1.55 times less risky than SCOR SE. The stock trades about -0.03 of its potential returns per unit of risk. The SCOR SE is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,583 in SCOR SE on August 28, 2024 and sell it today you would lose (221.00) from holding SCOR SE or give up 8.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icade SA vs. SCOR SE
Performance |
| Timeline |
| Icade SA |
| SCOR SE |
Icade SA and SCOR SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icade SA and SCOR SE
The main advantage of trading using opposite Icade SA and SCOR SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icade SA 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.The idea behind Icade SA and SCOR SE 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.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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