Correlation Between United States and Abingdon Health
Can any of the company-specific risk be diversified away by investing in both United States and Abingdon Health 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 United States and Abingdon Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Abingdon Health Plc, you can compare the effects of market volatilities on United States and Abingdon Health 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 United States with a short position of Abingdon Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Abingdon Health.
Diversification Opportunities for United States and Abingdon Health
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Abingdon is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Abingdon Health Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abingdon Health Plc and United States 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 United States Steel are associated (or correlated) with Abingdon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abingdon Health Plc has no effect on the direction of United States i.e., United States and Abingdon Health go up and down completely randomly.
Pair Corralation between United States and Abingdon Health
Assuming the 90 days trading horizon United States is expected to generate 2.48 times less return on investment than Abingdon Health. But when comparing it to its historical volatility, United States Steel is 1.41 times less risky than Abingdon Health. It trades about 0.03 of its potential returns per unit of risk. Abingdon Health Plc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 475.00 in Abingdon Health Plc on October 11, 2024 and sell it today you would earn a total of 325.00 from holding Abingdon Health Plc or generate 68.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Abingdon Health Plc
Performance |
| Timeline |
| United States Steel |
| Abingdon Health Plc |
United States and Abingdon Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Abingdon Health
The main advantage of trading using opposite United States and Abingdon Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Abingdon Health 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 Abingdon Health will offset losses from the drop in Abingdon Health's long position.| United States vs. Sydbank | United States vs. Zegona Communications Plc | United States vs. Raymond James Financial | United States vs. Moneta Money Bank |
| Abingdon Health vs. Kaufman Et Broad | Abingdon Health vs. One Media iP | Abingdon Health vs. Live Nation Entertainment | Abingdon Health vs. Intermediate Capital Group |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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