Correlation Between Medical Facilities and Western Investment
Can any of the company-specific risk be diversified away by investing in both Medical Facilities and Western Investment 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 Western Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Facilities and Western Investment, you can compare the effects of market volatilities on Medical Facilities and Western Investment 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 Western Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Facilities and Western Investment.
Diversification Opportunities for Medical Facilities and Western Investment
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Medical and Western is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Medical Facilities and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment 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 Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of Medical Facilities i.e., Medical Facilities and Western Investment go up and down completely randomly.
Pair Corralation between Medical Facilities and Western Investment
Assuming the 90 days horizon Medical Facilities is expected to generate 1.43 times more return on investment than Western Investment. However, Medical Facilities is 1.43 times more volatile than Western Investment. It trades about 0.11 of its potential returns per unit of risk. Western Investment is currently generating about 0.01 per unit of risk. If you would invest 1,469 in Medical Facilities on August 24, 2024 and sell it today you would earn a total of 75.00 from holding Medical Facilities or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medical Facilities vs. Western Investment
Performance |
| Timeline |
| Medical Facilities |
| Western Investment |
Medical Facilities and Western Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Facilities and Western Investment
The main advantage of trading using opposite Medical Facilities and Western Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Facilities position performs unexpectedly, Western Investment 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 Western Investment will offset losses from the drop in Western Investment's long position.| Medical Facilities vs. VentriPoint Diagnostics | Medical Facilities vs. CHAR Technologies | Medical Facilities vs. Cardiol Therapeutics Class | Medical Facilities vs. Forstrong Global 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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