Correlation Between Capitol Health and Global Health
Can any of the company-specific risk be diversified away by investing in both Capitol Health and Global Health 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 Capitol Health and Global Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Health and Global Health, you can compare the effects of market volatilities on Capitol Health and Global Health 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 Capitol Health with a short position of Global Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Health and Global Health.
Diversification Opportunities for Capitol Health and Global Health
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capitol and Global is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Health and Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Health and Capitol 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 Capitol Health are associated (or correlated) with Global Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Health has no effect on the direction of Capitol Health i.e., Capitol Health and Global Health go up and down completely randomly.
Pair Corralation between Capitol Health and Global Health
Assuming the 90 days trading horizon Capitol Health is expected to generate 1.15 times more return on investment than Global Health. However, Capitol Health is 1.15 times more volatile than Global Health. It trades about 0.01 of its potential returns per unit of risk. Global Health is currently generating about 0.01 per unit of risk. If you would invest 38.00 in Capitol Health on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Capitol Health or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitol Health vs. Global Health
Performance |
| Timeline |
| Capitol Health |
| Global Health |
Capitol Health and Global Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitol Health and Global Health
The main advantage of trading using opposite Capitol Health and Global Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Health position performs unexpectedly, Global Health 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 Global Health will offset losses from the drop in Global Health's long position.| Capitol Health vs. Iron Road | Capitol Health vs. Champion Iron | Capitol Health vs. Bisalloy Steel Group | Capitol Health vs. Sky Metals |
| Global Health vs. Accent Resources NL | Global Health vs. Hutchison Telecommunications | Global Health vs. GO2 People | Global Health vs. Pact Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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