Correlation Between SCOR PK and Mainstay Large

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

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

Diversification Opportunities for SCOR PK and Mainstay Large

0.59

Correlation Coefficient

SCOR PK  Mainstay Large

Very weak diversification

The 3 months correlation between SCOR and Mainstay is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Mainstay Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Large 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 Mainstay Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Large Cap has no effect on the direction of SCOR PK i.e., SCOR PK and Mainstay Large go up and down completely randomly.

Pair Corralation between SCOR PK and Mainstay Large

Assuming the 90 days horizon SCOR PK is expected to generate 2.02 times more return on investment than Mainstay Large. However, SCOR PK is 2.02 times more volatile than Mainstay Large Cap. It trades about 0.15 of its potential returns per unit of risk. Mainstay Large Cap is currently generating about 0.15 per unit of risk. If you would invest  210.00  in SCOR PK on June 29, 2024 and sell it today you would earn a total of  17.00  from holding SCOR PK or generate 8.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

SCOR PK  vs.  Mainstay Large Cap

SCOR PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCOR PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in October 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Mainstay Large Cap

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Large Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Mainstay Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SCOR PK and Mainstay Large

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

The idea behind SCOR PK and Mainstay Large Cap 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.