Correlation Between SCOR PK and Somerset Trust
Can any of the company-specific risk be diversified away by investing in both SCOR PK and Somerset Trust 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 Somerset Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOR PK and Somerset Trust Holding, you can compare the effects of market volatilities on SCOR PK and Somerset Trust 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 Somerset Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Somerset Trust.
Diversification Opportunities for SCOR PK and Somerset Trust
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCOR and Somerset is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Somerset Trust Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Somerset Trust Holding 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 Somerset Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Somerset Trust Holding has no effect on the direction of SCOR PK i.e., SCOR PK and Somerset Trust go up and down completely randomly.
Pair Corralation between SCOR PK and Somerset Trust
Assuming the 90 days horizon SCOR PK is expected to generate 1.45 times more return on investment than Somerset Trust. However, SCOR PK is 1.45 times more volatile than Somerset Trust Holding. It trades about 0.29 of its potential returns per unit of risk. Somerset Trust Holding is currently generating about 0.11 per unit of risk. If you would invest 210.00 in SCOR PK on September 1, 2024 and sell it today you would earn a total of 38.00 from holding SCOR PK or generate 18.1% 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. Somerset Trust Holding
Performance |
| Timeline |
| SCOR PK |
| Somerset Trust Holding |
SCOR PK and Somerset Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOR PK and Somerset Trust
The main advantage of trading using opposite SCOR PK and Somerset Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR PK position performs unexpectedly, Somerset Trust 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 Somerset Trust will offset losses from the drop in Somerset Trust's long position.The idea behind SCOR PK and Somerset Trust Holding 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.| Somerset Trust vs. HUMANA INC | Somerset Trust vs. SCOR PK | Somerset Trust vs. Aquagold International | Somerset Trust 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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