Correlation Between Global Net and Inspiration Healthcare
Can any of the company-specific risk be diversified away by investing in both Global Net and Inspiration 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 Global Net and Inspiration Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Net Lease and Inspiration Healthcare Group, you can compare the effects of market volatilities on Global Net and Inspiration 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 Global Net with a short position of Inspiration Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Inspiration Healthcare.
Diversification Opportunities for Global Net and Inspiration Healthcare
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Inspiration is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Inspiration Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspiration Healthcare and Global Net 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 Global Net Lease are associated (or correlated) with Inspiration Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspiration Healthcare has no effect on the direction of Global Net i.e., Global Net and Inspiration Healthcare go up and down completely randomly.
Pair Corralation between Global Net and Inspiration Healthcare
Assuming the 90 days trading horizon Global Net Lease is expected to generate 0.53 times more return on investment than Inspiration Healthcare. However, Global Net Lease is 1.87 times less risky than Inspiration Healthcare. It trades about -0.14 of its potential returns per unit of risk. Inspiration Healthcare Group is currently generating about -0.32 per unit of risk. If you would invest 748.00 in Global Net Lease on September 14, 2024 and sell it today you would lose (30.00) from holding Global Net Lease or give up 4.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Net Lease vs. Inspiration Healthcare Group
Performance |
| Timeline |
| Global Net Lease |
| Inspiration Healthcare |
Global Net and Inspiration Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and Inspiration Healthcare
The main advantage of trading using opposite Global Net and Inspiration Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, Inspiration 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 Inspiration Healthcare will offset losses from the drop in Inspiration Healthcare's long position.| Global Net vs. Samsung Electronics Co | Global Net vs. Samsung Electronics Co | Global Net vs. Hyundai Motor | Global Net vs. Reliance Industries Ltd |
| Inspiration Healthcare vs. McEwen Mining | Inspiration Healthcare vs. Molson Coors Beverage | Inspiration Healthcare vs. Lundin Mining Corp | Inspiration Healthcare vs. Global Net Lease |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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