Correlation Between SCOR SE and Vicat SA
Can any of the company-specific risk be diversified away by investing in both SCOR SE and Vicat SA 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 SCOR SE and Vicat SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOR SE and Vicat SA, you can compare the effects of market volatilities on SCOR SE and Vicat SA 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 SCOR SE with a short position of Vicat SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR SE and Vicat SA.
Diversification Opportunities for SCOR SE and Vicat SA
Poor diversification
The 3 months correlation between SCOR and Vicat is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding SCOR SE and Vicat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicat SA and SCOR SE 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 SCOR SE are associated (or correlated) with Vicat SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicat SA has no effect on the direction of SCOR SE i.e., SCOR SE and Vicat SA go up and down completely randomly.
Pair Corralation between SCOR SE and Vicat SA
Assuming the 90 days trading horizon SCOR SE is expected to generate 0.63 times more return on investment than Vicat SA. However, SCOR SE is 1.58 times less risky than Vicat SA. It trades about 0.34 of its potential returns per unit of risk. Vicat SA is currently generating about 0.19 per unit of risk. If you would invest 2,322 in SCOR SE on October 25, 2024 and sell it today you would earn a total of 172.00 from holding SCOR SE or generate 7.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCOR SE vs. Vicat SA
Performance |
| Timeline |
| SCOR SE |
| Vicat SA |
SCOR SE and Vicat SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOR SE and Vicat SA
The main advantage of trading using opposite SCOR SE and Vicat SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR SE position performs unexpectedly, Vicat SA 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 Vicat SA will offset losses from the drop in Vicat SA's long position.The idea behind SCOR SE and Vicat SA 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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