Correlation Between SCOR PK and Federated Mid
Can any of the company-specific risk be diversified away by investing in both SCOR PK and Federated Mid 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 Federated Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOR PK and Federated Mid Cap Index, you can compare the effects of market volatilities on SCOR PK and Federated Mid 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 Federated Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Federated Mid.
Diversification Opportunities for SCOR PK and Federated Mid
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCOR and Federated is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Federated Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mid Cap 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 Federated Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mid Cap has no effect on the direction of SCOR PK i.e., SCOR PK and Federated Mid go up and down completely randomly.
Pair Corralation between SCOR PK and Federated Mid
Assuming the 90 days horizon SCOR PK is expected to generate 0.99 times more return on investment than Federated Mid. However, SCOR PK is 1.01 times less risky than Federated Mid. It trades about 0.31 of its potential returns per unit of risk. Federated Mid Cap Index is currently generating about -0.19 per unit of risk. If you would invest 214.00 in SCOR PK on September 13, 2024 and sell it today you would earn a total of 40.00 from holding SCOR PK or generate 18.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SCOR PK vs. Federated Mid Cap Index
Performance |
| Timeline |
| SCOR PK |
| Federated Mid Cap |
SCOR PK and Federated Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOR PK and Federated Mid
The main advantage of trading using opposite SCOR PK and Federated Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR PK position performs unexpectedly, Federated Mid 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 Federated Mid will offset losses from the drop in Federated Mid's long position.The idea behind SCOR PK and Federated Mid Cap Index 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.| Federated Mid vs. Federated Mdt Large | Federated Mid vs. Federated Global Allocation | Federated Mid vs. Federated Max Cap Index | Federated Mid vs. Federated Total Return |
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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