Correlation Between SCOR PK and IShares Healthcare

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

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

Diversification Opportunities for SCOR PK and IShares Healthcare

0.07

Correlation Coefficient

SCOR PK  IShares Healthcare

Significant diversification

The 3 months correlation between SCOR and IShares is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and iShares Healthcare Providers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Healthcare 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 IShares Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Healthcare has no effect on the direction of SCOR PK i.e., SCOR PK and IShares Healthcare go up and down completely randomly.

Pair Corralation between SCOR PK and IShares Healthcare

Assuming the 90 days horizon SCOR PK is expected to under-perform the IShares Healthcare. In addition to that, SCOR PK is 5.11 times more volatile than iShares Healthcare Providers. It trades about -0.02 of its total potential returns per unit of risk. iShares Healthcare Providers is currently generating about 0.01 per unit of volatility. If you would invest  5,163  in iShares Healthcare Providers on February 4, 2024 and sell it today you would earn a total of  6.00  from holding iShares Healthcare Providers or generate 0.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

SCOR PK  vs.  iShares Healthcare Providers

SCOR PK

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 3 (%) 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 June 2024.

iShares Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Healthcare Providers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, IShares Healthcare is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SCOR PK and IShares Healthcare

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

The idea behind SCOR PK and iShares Healthcare Providers 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.