Correlation Between SCOR PK and Dimensional International
Can any of the company-specific risk be diversified away by investing in both SCOR PK and Dimensional International 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 Dimensional International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOR PK and Dimensional International Core, you can compare the effects of market volatilities on SCOR PK and Dimensional International 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 Dimensional International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Dimensional International.
Diversification Opportunities for SCOR PK and Dimensional International
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SCOR and Dimensional is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Dimensional International Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International 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 Dimensional International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional International has no effect on the direction of SCOR PK i.e., SCOR PK and Dimensional International go up and down completely randomly.
Pair Corralation between SCOR PK and Dimensional International
Assuming the 90 days horizon SCOR PK is expected to generate 4.37 times less return on investment than Dimensional International. In addition to that, SCOR PK is 5.47 times more volatile than Dimensional International Core. It trades about 0.01 of its total potential returns per unit of risk. Dimensional International Core is currently generating about 0.23 per unit of volatility. If you would invest 3,035 in Dimensional International Core on November 29, 2024 and sell it today you would earn a total of 108.00 from holding Dimensional International Core or generate 3.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCOR PK vs. Dimensional International Core
Performance |
| Timeline |
| SCOR PK |
| Dimensional International |
SCOR PK and Dimensional International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOR PK and Dimensional International
The main advantage of trading using opposite SCOR PK and Dimensional International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR PK position performs unexpectedly, Dimensional International 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 Dimensional International will offset losses from the drop in Dimensional International's long position.The idea behind SCOR PK and Dimensional International Core 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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