Correlation Between MEDICAL FACILITIES and Cars
Can any of the company-specific risk be diversified away by investing in both MEDICAL FACILITIES and Cars 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 MEDICAL FACILITIES and Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEDICAL FACILITIES NEW and Cars Inc, you can compare the effects of market volatilities on MEDICAL FACILITIES and Cars 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 MEDICAL FACILITIES with a short position of Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDICAL FACILITIES and Cars.
Diversification Opportunities for MEDICAL FACILITIES and Cars
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MEDICAL and Cars is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding MEDICAL FACILITIES NEW and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of MEDICAL FACILITIES i.e., MEDICAL FACILITIES and Cars go up and down completely randomly.
Pair Corralation between MEDICAL FACILITIES and Cars
Assuming the 90 days horizon MEDICAL FACILITIES is expected to generate 1.37 times less return on investment than Cars. But when comparing it to its historical volatility, MEDICAL FACILITIES NEW is 1.45 times less risky than Cars. It trades about 0.17 of its potential returns per unit of risk. Cars Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,650 in Cars Inc on November 5, 2024 and sell it today you would earn a total of 130.00 from holding Cars Inc or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEDICAL FACILITIES NEW vs. Cars Inc
Performance |
| Timeline |
| MEDICAL FACILITIES NEW |
| Cars Inc |
MEDICAL FACILITIES and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEDICAL FACILITIES and Cars
The main advantage of trading using opposite MEDICAL FACILITIES and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDICAL FACILITIES position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| MEDICAL FACILITIES vs. Fresenius SE Co | MEDICAL FACILITIES vs. Fresenius Medical Care | MEDICAL FACILITIES vs. Ramsay Health Care | MEDICAL FACILITIES vs. Chemed |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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