Correlation Between Abingdon Health and Target Corp
Can any of the company-specific risk be diversified away by investing in both Abingdon Health and Target Corp 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 Abingdon Health and Target Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abingdon Health Plc and Target Corp, you can compare the effects of market volatilities on Abingdon Health and Target Corp 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 Abingdon Health with a short position of Target Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abingdon Health and Target Corp.
Diversification Opportunities for Abingdon Health and Target Corp
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Abingdon and Target is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc and Target Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Corp and Abingdon 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 Abingdon Health Plc are associated (or correlated) with Target Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Corp has no effect on the direction of Abingdon Health i.e., Abingdon Health and Target Corp go up and down completely randomly.
Pair Corralation between Abingdon Health and Target Corp
Assuming the 90 days trading horizon Abingdon Health Plc is expected to generate 2.1 times more return on investment than Target Corp. However, Abingdon Health is 2.1 times more volatile than Target Corp. It trades about 0.03 of its potential returns per unit of risk. Target Corp is currently generating about -0.01 per unit of risk. If you would invest 650.00 in Abingdon Health Plc on November 28, 2024 and sell it today you would earn a total of 75.00 from holding Abingdon Health Plc or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.53% |
| Values | Daily Returns |
Abingdon Health Plc vs. Target Corp
Performance |
| Timeline |
| Abingdon Health Plc |
| Target Corp |
Abingdon Health and Target Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abingdon Health and Target Corp
The main advantage of trading using opposite Abingdon Health and Target Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abingdon Health position performs unexpectedly, Target Corp 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 Target Corp will offset losses from the drop in Target Corp's long position.| Abingdon Health vs. Spirent Communications plc | Abingdon Health vs. Hochschild Mining plc | Abingdon Health vs. Batm Advanced Communications | Abingdon Health vs. Extra Space Storage |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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