Correlation Between SCOR PK and ARK Israel

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

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

Diversification Opportunities for SCOR PK and ARK Israel

0.77

Correlation Coefficient

SCOR PK  ARK Israel

Poor diversification

The 3 months correlation between SCOR and ARK is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and ARK Israel Innovative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Israel Innovative 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 ARK Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Israel Innovative has no effect on the direction of SCOR PK i.e., SCOR PK and ARK Israel go up and down completely randomly.

Pair Corralation between SCOR PK and ARK Israel

Assuming the 90 days horizon SCOR PK is expected to generate 8.08 times less return on investment than ARK Israel. In addition to that, SCOR PK is 2.34 times more volatile than ARK Israel Innovative. It trades about 0.0 of its total potential returns per unit of risk. ARK Israel Innovative is currently generating about 0.05 per unit of volatility. If you would invest  1,894  in ARK Israel Innovative on October 1, 2024 and sell it today you would earn a total of  325.00  from holding ARK Israel Innovative or generate 17.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.79%
Values	Daily Returns

SCOR PK  vs.  ARK Israel Innovative

SCOR PK

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SCOR PK showed solid returns over the last few months and may actually be approaching a breakup point.

ARK Israel Innovative

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Israel Innovative are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, ARK Israel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SCOR PK and ARK Israel

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

The idea behind SCOR PK and ARK Israel Innovative 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.