Correlation Between Vanguard Emerging and SCOR PK

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

By analyzing existing cross correlation between Vanguard Emerging Markets and SCOR PK, you can compare the effects of market volatilities on Vanguard Emerging and SCOR PK 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 Vanguard Emerging with a short position of SCOR PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and SCOR PK.

Diversification Opportunities for Vanguard Emerging and SCOR PK

0.25

Correlation Coefficient

Vanguard Emerging  SCOR PK

Modest diversification

The 3 months correlation between Vanguard and SCOR is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and SCOR PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR PK and Vanguard Emerging 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 Vanguard Emerging Markets are associated (or correlated) with SCOR PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR PK has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and SCOR PK go up and down completely randomly.

Pair Corralation between Vanguard Emerging and SCOR PK

Assuming the 90 days horizon Vanguard Emerging is expected to generate 2.45 times less return on investment than SCOR PK. But when comparing it to its historical volatility, Vanguard Emerging Markets is 3.64 times less risky than SCOR PK. It trades about 0.08 of its potential returns per unit of risk. SCOR PK is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  125.00  in SCOR PK on June 29, 2024 and sell it today you would earn a total of  102.00  from holding SCOR PK or generate 81.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.39%
Values	Daily Returns

Vanguard Emerging Markets  vs.  SCOR PK

Vanguard Emerging Markets

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Emerging Markets are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Vanguard Emerging may actually be approaching a critical reversion point that can send shares even higher in October 2024.

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.

Pair Trading with Vanguard Emerging and SCOR PK

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

The idea behind Vanguard Emerging Markets and SCOR PK 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.