Correlation Between Forstrong Global and Medical Facilities
Can any of the company-specific risk be diversified away by investing in both Forstrong Global and Medical Facilities 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 Forstrong Global and Medical Facilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forstrong Global Income and Medical Facilities, you can compare the effects of market volatilities on Forstrong Global and Medical Facilities 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 Forstrong Global with a short position of Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forstrong Global and Medical Facilities.
Diversification Opportunities for Forstrong Global and Medical Facilities
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Forstrong and Medical is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities and Forstrong Global 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 Forstrong Global Income are associated (or correlated) with Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of Forstrong Global i.e., Forstrong Global and Medical Facilities go up and down completely randomly.
Pair Corralation between Forstrong Global and Medical Facilities
Assuming the 90 days trading horizon Forstrong Global Income is expected to under-perform the Medical Facilities. But the etf apears to be less risky and, when comparing its historical volatility, Forstrong Global Income is 6.12 times less risky than Medical Facilities. The etf trades about -0.08 of its potential returns per unit of risk. The Medical Facilities is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,462 in Medical Facilities on August 28, 2024 and sell it today you would earn a total of 156.00 from holding Medical Facilities or generate 10.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forstrong Global Income vs. Medical Facilities
Performance |
| Timeline |
| Forstrong Global Income |
| Medical Facilities |
Forstrong Global and Medical Facilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forstrong Global and Medical Facilities
The main advantage of trading using opposite Forstrong Global and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global position performs unexpectedly, Medical Facilities 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 Medical Facilities will offset losses from the drop in Medical Facilities' long position.| Forstrong Global vs. iShares SPTSX 60 | Forstrong Global vs. iShares Core SP | Forstrong Global vs. iShares Core SPTSX | Forstrong Global vs. BMO Aggregate Bond |
| Medical Facilities vs. Extendicare | Medical Facilities vs. Sienna Senior Living | Medical Facilities vs. Rogers Sugar | Medical Facilities vs. Chemtrade Logistics Income |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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