Correlation Between PURETECH HEALTH and Five Below
Can any of the company-specific risk be diversified away by investing in both PURETECH HEALTH and Five Below 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 PURETECH HEALTH and Five Below into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PURETECH HEALTH PLC and Five Below, you can compare the effects of market volatilities on PURETECH HEALTH and Five Below 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 PURETECH HEALTH with a short position of Five Below. Check out your portfolio center. Please also check ongoing floating volatility patterns of PURETECH HEALTH and Five Below.
Diversification Opportunities for PURETECH HEALTH and Five Below
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between PURETECH and Five is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding PURETECH HEALTH PLC and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below and PURETECH HEALTH 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 PURETECH HEALTH PLC are associated (or correlated) with Five Below. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Below has no effect on the direction of PURETECH HEALTH i.e., PURETECH HEALTH and Five Below go up and down completely randomly.
Pair Corralation between PURETECH HEALTH and Five Below
Assuming the 90 days horizon PURETECH HEALTH PLC is expected to generate 1.38 times more return on investment than Five Below. However, PURETECH HEALTH is 1.38 times more volatile than Five Below. It trades about -0.02 of its potential returns per unit of risk. Five Below is currently generating about -0.13 per unit of risk. If you would invest 179.00 in PURETECH HEALTH PLC on November 7, 2024 and sell it today you would lose (5.00) from holding PURETECH HEALTH PLC or give up 2.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PURETECH HEALTH PLC vs. Five Below
Performance |
| Timeline |
| PURETECH HEALTH PLC |
| Five Below |
PURETECH HEALTH and Five Below Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PURETECH HEALTH and Five Below
The main advantage of trading using opposite PURETECH HEALTH and Five Below positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PURETECH HEALTH position performs unexpectedly, Five Below 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 Five Below will offset losses from the drop in Five Below's long position.| PURETECH HEALTH vs. SIVERS SEMICONDUCTORS AB | PURETECH HEALTH vs. NorAm Drilling AS | PURETECH HEALTH vs. Volkswagen AG | PURETECH HEALTH vs. Darden Restaurants |
| Five Below vs. Pebblebrook Hotel Trust | Five Below vs. Diversified Healthcare Trust | Five Below vs. Keck Seng Investments | Five Below vs. SEI INVESTMENTS |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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