Correlation Between American Healthcare and Lundin Energy
Can any of the company-specific risk be diversified away by investing in both American Healthcare and Lundin Energy 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 American Healthcare and Lundin Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Healthcare REIT, and Lundin Energy AB, you can compare the effects of market volatilities on American Healthcare and Lundin Energy 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 American Healthcare with a short position of Lundin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Healthcare and Lundin Energy.
Diversification Opportunities for American Healthcare and Lundin Energy
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Lundin is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding American Healthcare REIT, and Lundin Energy AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Energy AB and American Healthcare 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 American Healthcare REIT, are associated (or correlated) with Lundin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Energy AB has no effect on the direction of American Healthcare i.e., American Healthcare and Lundin Energy go up and down completely randomly.
Pair Corralation between American Healthcare and Lundin Energy
Considering the 90-day investment horizon American Healthcare REIT, is expected to generate 2.65 times more return on investment than Lundin Energy. However, American Healthcare is 2.65 times more volatile than Lundin Energy AB. It trades about 0.1 of its potential returns per unit of risk. Lundin Energy AB is currently generating about 0.13 per unit of risk. If you would invest 2,697 in American Healthcare REIT, on October 20, 2024 and sell it today you would earn a total of 93.00 from holding American Healthcare REIT, or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
American Healthcare REIT, vs. Lundin Energy AB
Performance |
| Timeline |
| American Healthcare REIT, |
| Lundin Energy AB |
American Healthcare and Lundin Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Healthcare and Lundin Energy
The main advantage of trading using opposite American Healthcare and Lundin Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Healthcare position performs unexpectedly, Lundin Energy 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 Lundin Energy will offset losses from the drop in Lundin Energy's long position.| American Healthcare vs. SohuCom | American Healthcare vs. GameStop Corp | American Healthcare vs. Bilibili | American Healthcare vs. BRP Inc |
| Lundin Energy vs. Renew Energy Global | Lundin Energy vs. Energy Vault Holdings | Lundin Energy vs. Fluence Energy | Lundin Energy vs. Advent Technologies 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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