Correlation Between HEALTHCARE TRPFD and S A P
Can any of the company-specific risk be diversified away by investing in both HEALTHCARE TRPFD and S A P 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 HEALTHCARE TRPFD and S A P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEALTHCARE TRPFD SH and SAP SE, you can compare the effects of market volatilities on HEALTHCARE TRPFD and S A P 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 HEALTHCARE TRPFD with a short position of S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHCARE TRPFD and S A P.
Diversification Opportunities for HEALTHCARE TRPFD and S A P
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HEALTHCARE and SAP is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHCARE TRPFD SH and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and HEALTHCARE TRPFD 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 HEALTHCARE TRPFD SH are associated (or correlated) with S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of HEALTHCARE TRPFD i.e., HEALTHCARE TRPFD and S A P go up and down completely randomly.
Pair Corralation between HEALTHCARE TRPFD and S A P
Assuming the 90 days horizon HEALTHCARE TRPFD is expected to generate 1.68 times less return on investment than S A P. In addition to that, HEALTHCARE TRPFD is 2.73 times more volatile than SAP SE. It trades about 0.07 of its total potential returns per unit of risk. SAP SE is currently generating about 0.3 per unit of volatility. If you would invest 21,595 in SAP SE on November 1, 2024 and sell it today you would earn a total of 5,185 from holding SAP SE or generate 24.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
HEALTHCARE TRPFD SH vs. SAP SE
Performance |
| Timeline |
| HEALTHCARE TRPFD |
| SAP SE |
HEALTHCARE TRPFD and S A P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEALTHCARE TRPFD and S A P
The main advantage of trading using opposite HEALTHCARE TRPFD and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEALTHCARE TRPFD position performs unexpectedly, S A P 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 S A P will offset losses from the drop in S A P's long position.| HEALTHCARE TRPFD vs. Apple Inc | HEALTHCARE TRPFD vs. Apple Inc | HEALTHCARE TRPFD vs. Apple Inc | HEALTHCARE TRPFD vs. Apple Inc |
| S A P vs. MAANSHAN IRON H | S A P vs. Tianjin Capital Environmental | S A P vs. Xiwang Special Steel | S A P vs. Nippon Steel |
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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