Correlation Between Medical Facilities and PROCTER GAMBLE
Can any of the company-specific risk be diversified away by investing in both Medical Facilities and PROCTER GAMBLE 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 Medical Facilities and PROCTER GAMBLE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Facilities and PROCTER GAMBLE CDR, you can compare the effects of market volatilities on Medical Facilities and PROCTER GAMBLE 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 Medical Facilities with a short position of PROCTER GAMBLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Facilities and PROCTER GAMBLE.
Diversification Opportunities for Medical Facilities and PROCTER GAMBLE
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Medical and PROCTER is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Medical Facilities and PROCTER GAMBLE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROCTER GAMBLE CDR and Medical Facilities 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 Medical Facilities are associated (or correlated) with PROCTER GAMBLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROCTER GAMBLE CDR has no effect on the direction of Medical Facilities i.e., Medical Facilities and PROCTER GAMBLE go up and down completely randomly.
Pair Corralation between Medical Facilities and PROCTER GAMBLE
Assuming the 90 days horizon Medical Facilities is expected to generate 1.65 times more return on investment than PROCTER GAMBLE. However, Medical Facilities is 1.65 times more volatile than PROCTER GAMBLE CDR. It trades about 0.16 of its potential returns per unit of risk. PROCTER GAMBLE CDR is currently generating about 0.09 per unit of risk. If you would invest 867.00 in Medical Facilities on September 5, 2024 and sell it today you would earn a total of 722.00 from holding Medical Facilities or generate 83.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medical Facilities vs. PROCTER GAMBLE CDR
Performance |
| Timeline |
| Medical Facilities |
| PROCTER GAMBLE CDR |
Medical Facilities and PROCTER GAMBLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Facilities and PROCTER GAMBLE
The main advantage of trading using opposite Medical Facilities and PROCTER GAMBLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Facilities position performs unexpectedly, PROCTER GAMBLE 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 PROCTER GAMBLE will offset losses from the drop in PROCTER GAMBLE's long position.| Medical Facilities vs. Extendicare | Medical Facilities vs. Sienna Senior Living | Medical Facilities vs. Rogers Sugar | Medical Facilities vs. Chemtrade Logistics Income |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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