Correlation Between Scilex Holding and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Scilex Holding and AstraZeneca PLC 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 Scilex Holding and AstraZeneca PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scilex Holding and AstraZeneca PLC ADR, you can compare the effects of market volatilities on Scilex Holding and AstraZeneca PLC 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 Scilex Holding with a short position of AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scilex Holding and AstraZeneca PLC.
Diversification Opportunities for Scilex Holding and AstraZeneca PLC
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scilex and AstraZeneca is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Scilex Holding and AstraZeneca PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC ADR and Scilex Holding 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 Scilex Holding are associated (or correlated) with AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC ADR has no effect on the direction of Scilex Holding i.e., Scilex Holding and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Scilex Holding and AstraZeneca PLC
Assuming the 90 days horizon Scilex Holding is expected to generate 11.47 times more return on investment than AstraZeneca PLC. However, Scilex Holding is 11.47 times more volatile than AstraZeneca PLC ADR. It trades about 0.05 of its potential returns per unit of risk. AstraZeneca PLC ADR is currently generating about -0.28 per unit of risk. If you would invest 36.00 in Scilex Holding on August 25, 2024 and sell it today you would lose (9.00) from holding Scilex Holding or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Scilex Holding vs. AstraZeneca PLC ADR
Performance |
| Timeline |
| Scilex Holding |
| AstraZeneca PLC ADR |
Scilex Holding and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scilex Holding and AstraZeneca PLC
The main advantage of trading using opposite Scilex Holding and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scilex Holding position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.| Scilex Holding vs. ServiceNow | Scilex Holding vs. Qualys Inc | Scilex Holding vs. Ark Restaurants Corp | Scilex Holding vs. NetSol Technologies |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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