Correlation Between SCOR PK and AdvisorShares Hotel
Can any of the company-specific risk be diversified away by investing in both SCOR PK and AdvisorShares Hotel 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 PK and AdvisorShares Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOR PK and AdvisorShares Hotel ETF, you can compare the effects of market volatilities on SCOR PK and AdvisorShares Hotel 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 PK with a short position of AdvisorShares Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and AdvisorShares Hotel.
Diversification Opportunities for SCOR PK and AdvisorShares Hotel
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCOR and AdvisorShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and AdvisorShares Hotel ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Hotel ETF and SCOR PK 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 PK are associated (or correlated) with AdvisorShares Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Hotel ETF has no effect on the direction of SCOR PK i.e., SCOR PK and AdvisorShares Hotel go up and down completely randomly.
Pair Corralation between SCOR PK and AdvisorShares Hotel
Assuming the 90 days horizon SCOR PK is expected to generate 2.61 times more return on investment than AdvisorShares Hotel. However, SCOR PK is 2.61 times more volatile than AdvisorShares Hotel ETF. It trades about 0.03 of its potential returns per unit of risk. AdvisorShares Hotel ETF is currently generating about 0.08 per unit of risk. If you would invest 195.00 in SCOR PK on September 12, 2024 and sell it today you would earn a total of 64.00 from holding SCOR PK or generate 32.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.39% |
| Values | Daily Returns |
SCOR PK vs. AdvisorShares Hotel ETF
Performance |
| Timeline |
| SCOR PK |
| AdvisorShares Hotel ETF |
SCOR PK and AdvisorShares Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOR PK and AdvisorShares Hotel
The main advantage of trading using opposite SCOR PK and AdvisorShares Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR PK position performs unexpectedly, AdvisorShares Hotel 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 AdvisorShares Hotel will offset losses from the drop in AdvisorShares Hotel's long position.The idea behind SCOR PK and AdvisorShares Hotel ETF 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.| AdvisorShares Hotel vs. Invesco Dynamic Building | AdvisorShares Hotel vs. SCOR PK | AdvisorShares Hotel vs. Morningstar Unconstrained Allocation | AdvisorShares Hotel vs. Thrivent High Yield |
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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