Correlation Between NYSE Composite and Scholar Rock
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Scholar Rock 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 NYSE Composite and Scholar Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Scholar Rock Holding, you can compare the effects of market volatilities on NYSE Composite and Scholar Rock 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 NYSE Composite with a short position of Scholar Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Scholar Rock.
Diversification Opportunities for NYSE Composite and Scholar Rock
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Scholar is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Scholar Rock Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scholar Rock Holding and NYSE Composite 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 NYSE Composite are associated (or correlated) with Scholar Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scholar Rock Holding has no effect on the direction of NYSE Composite i.e., NYSE Composite and Scholar Rock go up and down completely randomly.
Pair Corralation between NYSE Composite and Scholar Rock
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Scholar Rock. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 15.2 times less risky than Scholar Rock. The index trades about -0.11 of its potential returns per unit of risk. The Scholar Rock Holding is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 2,638 in Scholar Rock Holding on September 18, 2024 and sell it today you would earn a total of 1,705 from holding Scholar Rock Holding or generate 64.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Scholar Rock Holding
Performance |
| Timeline |
NYSE Composite and Scholar Rock Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Scholar Rock Holding
Pair trading matchups for Scholar Rock
Pair Trading with NYSE Composite and Scholar Rock
The main advantage of trading using opposite NYSE Composite and Scholar Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Scholar Rock 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 Scholar Rock will offset losses from the drop in Scholar Rock's long position.| NYSE Composite vs. Chipotle Mexican Grill | NYSE Composite vs. Cracker Barrel Old | NYSE Composite vs. Shake Shack | NYSE Composite vs. Integral Ad Science |
| Scholar Rock vs. Revolution Medicines | Scholar Rock vs. Black Diamond Therapeutics | Scholar Rock vs. Passage Bio | Scholar Rock vs. Monte Rosa Therapeutics |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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