Correlation Between Bell Food and Worldwide Healthcare
Can any of the company-specific risk be diversified away by investing in both Bell Food and Worldwide 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 Bell Food and Worldwide Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bell Food Group and Worldwide Healthcare Trust, you can compare the effects of market volatilities on Bell Food and Worldwide 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 Bell Food with a short position of Worldwide Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Food and Worldwide Healthcare.
Diversification Opportunities for Bell Food and Worldwide Healthcare
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bell and Worldwide is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bell Food Group and Worldwide Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldwide Healthcare and Bell Food 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 Bell Food Group are associated (or correlated) with Worldwide Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldwide Healthcare has no effect on the direction of Bell Food i.e., Bell Food and Worldwide Healthcare go up and down completely randomly.
Pair Corralation between Bell Food and Worldwide Healthcare
Assuming the 90 days trading horizon Bell Food Group is expected to generate 1.32 times more return on investment than Worldwide Healthcare. However, Bell Food is 1.32 times more volatile than Worldwide Healthcare Trust. It trades about 0.02 of its potential returns per unit of risk. Worldwide Healthcare Trust is currently generating about 0.01 per unit of risk. If you would invest 23,944 in Bell Food Group on October 18, 2024 and sell it today you would earn a total of 1,556 from holding Bell Food Group or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Bell Food Group vs. Worldwide Healthcare Trust
Performance |
| Timeline |
| Bell Food Group |
| Worldwide Healthcare |
Bell Food and Worldwide Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bell Food and Worldwide Healthcare
The main advantage of trading using opposite Bell Food and Worldwide Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bell Food position performs unexpectedly, Worldwide 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 Worldwide Healthcare will offset losses from the drop in Worldwide Healthcare's long position.| Bell Food vs. Aptitude Software Group | Bell Food vs. Hochschild Mining plc | Bell Food vs. Lundin Mining Corp | Bell Food vs. Vietnam Enterprise Investments |
| Worldwide Healthcare vs. Hilton Food Group | Worldwide Healthcare vs. Amedeo Air Four | Worldwide Healthcare vs. Bell Food Group | Worldwide Healthcare vs. Wizz Air Holdings |
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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