Correlation Between SCOR PK and Brookfield Reinsurance

Can any of the company-specific risk be diversified away by investing in both SCOR PK and Brookfield Reinsurance 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 Brookfield Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SCOR PK and Brookfield Reinsurance, you can compare the effects of market volatilities on SCOR PK and Brookfield Reinsurance 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 Brookfield Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Brookfield Reinsurance.

Diversification Opportunities for SCOR PK and Brookfield Reinsurance

0.33

Correlation Coefficient

SCOR PK  Brookfield Reinsurance

Weak diversification

The 3 months correlation between SCOR and Brookfield is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Brookfield Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Reinsurance 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 Brookfield Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Reinsurance has no effect on the direction of SCOR PK i.e., SCOR PK and Brookfield Reinsurance go up and down completely randomly.

Pair Corralation between SCOR PK and Brookfield Reinsurance

Assuming the 90 days horizon SCOR PK is expected to generate 1.52 times more return on investment than Brookfield Reinsurance. However, SCOR PK is 1.52 times more volatile than Brookfield Reinsurance. It trades about 0.02 of its potential returns per unit of risk. Brookfield Reinsurance is currently generating about -0.01 per unit of risk. If you would invest  332.00  in SCOR PK on January 31, 2024 and sell it today you would earn a total of  1.00  from holding SCOR PK or generate 0.3% 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.  Brookfield Reinsurance

SCOR PK

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, SCOR PK may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Brookfield Reinsurance

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Reinsurance are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Brookfield Reinsurance is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SCOR PK and Brookfield Reinsurance

The main advantage of trading using opposite SCOR PK and Brookfield Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR PK position performs unexpectedly, Brookfield Reinsurance 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 Brookfield Reinsurance will offset losses from the drop in Brookfield Reinsurance's long position.

The idea behind SCOR PK and Brookfield Reinsurance 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.