Correlation Between SCOR PK and Strats SM
Can any of the company-specific risk be diversified away by investing in both SCOR PK and Strats SM 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 Strats SM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOR PK and Strats SM Trust, you can compare the effects of market volatilities on SCOR PK and Strats SM 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 Strats SM. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Strats SM.
Diversification Opportunities for SCOR PK and Strats SM
Modest diversification
The 3 months correlation between SCOR and Strats is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Strats SM Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strats SM Trust 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 Strats SM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strats SM Trust has no effect on the direction of SCOR PK i.e., SCOR PK and Strats SM go up and down completely randomly.
Pair Corralation between SCOR PK and Strats SM
Assuming the 90 days horizon SCOR PK is expected to generate 9.42 times more return on investment than Strats SM. However, SCOR PK is 9.42 times more volatile than Strats SM Trust. It trades about 0.25 of its potential returns per unit of risk. Strats SM Trust is currently generating about 0.06 per unit of risk. If you would invest 215.00 in SCOR PK on September 2, 2024 and sell it today you would earn a total of 33.00 from holding SCOR PK or generate 15.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCOR PK vs. Strats SM Trust
Performance |
| Timeline |
| SCOR PK |
| Strats SM Trust |
SCOR PK and Strats SM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOR PK and Strats SM
The main advantage of trading using opposite SCOR PK and Strats SM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR PK position performs unexpectedly, Strats SM 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 Strats SM will offset losses from the drop in Strats SM's long position.The idea behind SCOR PK and Strats SM Trust 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.| Strats SM vs. STRATS SM Trust | Strats SM vs. STRATSSM Certificates series | Strats SM vs. STRATS SM Trust | Strats SM vs. Strats SM Trust |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |