Correlation Between Black Oak and Health Care
Can any of the company-specific risk be diversified away by investing in both Black Oak and Health Care 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 Black Oak and Health Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Oak Emerging and Health Care Ultrasector, you can compare the effects of market volatilities on Black Oak and Health Care 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 Black Oak with a short position of Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Oak and Health Care.
Diversification Opportunities for Black Oak and Health Care
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Black and Health is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Black Oak Emerging and Health Care Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Ultrasector and Black Oak 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 Black Oak Emerging are associated (or correlated) with Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Ultrasector has no effect on the direction of Black Oak i.e., Black Oak and Health Care go up and down completely randomly.
Pair Corralation between Black Oak and Health Care
Assuming the 90 days horizon Black Oak Emerging is expected to generate 1.35 times more return on investment than Health Care. However, Black Oak is 1.35 times more volatile than Health Care Ultrasector. It trades about 0.02 of its potential returns per unit of risk. Health Care Ultrasector is currently generating about 0.01 per unit of risk. If you would invest 722.00 in Black Oak Emerging on October 29, 2024 and sell it today you would earn a total of 33.00 from holding Black Oak Emerging or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Oak Emerging vs. Health Care Ultrasector
Performance |
| Timeline |
| Black Oak Emerging |
| Health Care Ultrasector |
Black Oak and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Oak and Health Care
The main advantage of trading using opposite Black Oak and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Oak position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.| Black Oak vs. Red Oak Technology | Black Oak vs. Pin Oak Equity | Black Oak vs. White Oak Select | Black Oak vs. Live Oak Health |
| Health Care vs. Morningstar Global Income | Health Care vs. Dreyfusstandish Global Fixed | Health Care vs. Wisdomtree Siegel Global | Health Care vs. Aqr Global Macro |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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