Correlation Between Capitol Health and GreenX Metals
Can any of the company-specific risk be diversified away by investing in both Capitol Health and GreenX Metals 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 GreenX Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Health and GreenX Metals, you can compare the effects of market volatilities on Capitol Health and GreenX Metals 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 GreenX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Health and GreenX Metals.
Diversification Opportunities for Capitol Health and GreenX Metals
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capitol and GreenX is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Health and GreenX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenX Metals 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 GreenX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenX Metals has no effect on the direction of Capitol Health i.e., Capitol Health and GreenX Metals go up and down completely randomly.
Pair Corralation between Capitol Health and GreenX Metals
Assuming the 90 days trading horizon Capitol Health is expected to generate 1.09 times less return on investment than GreenX Metals. But when comparing it to its historical volatility, Capitol Health is 1.33 times less risky than GreenX Metals. It trades about 0.03 of its potential returns per unit of risk. GreenX Metals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 58.00 in GreenX Metals on September 12, 2024 and sell it today you would earn a total of 9.00 from holding GreenX Metals or generate 15.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitol Health vs. GreenX Metals
Performance |
| Timeline |
| Capitol Health |
| GreenX Metals |
Capitol Health and GreenX Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitol Health and GreenX Metals
The main advantage of trading using opposite Capitol Health and GreenX Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Health position performs unexpectedly, GreenX Metals 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 GreenX Metals will offset losses from the drop in GreenX Metals' long position.| Capitol Health vs. CSL | Capitol Health vs. Tamawood | Capitol Health vs. Cochlear | Capitol Health vs. Rea Group |
| GreenX Metals vs. Sonic Healthcare | GreenX Metals vs. Oneview Healthcare PLC | GreenX Metals vs. Capitol Health | GreenX Metals vs. Computershare |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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