Correlation Between Gear4music Plc and Bellevue Healthcare
Can any of the company-specific risk be diversified away by investing in both Gear4music Plc and Bellevue Healthcare 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 Gear4music Plc and Bellevue Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gear4music Plc and Bellevue Healthcare Trust, you can compare the effects of market volatilities on Gear4music Plc and Bellevue Healthcare 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 Gear4music Plc with a short position of Bellevue Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear4music Plc and Bellevue Healthcare.
Diversification Opportunities for Gear4music Plc and Bellevue Healthcare
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gear4music and Bellevue is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gear4music Plc and Bellevue Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellevue Healthcare Trust and Gear4music Plc 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 Gear4music Plc are associated (or correlated) with Bellevue Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellevue Healthcare Trust has no effect on the direction of Gear4music Plc i.e., Gear4music Plc and Bellevue Healthcare go up and down completely randomly.
Pair Corralation between Gear4music Plc and Bellevue Healthcare
Assuming the 90 days trading horizon Gear4music Plc is expected to generate 2.78 times more return on investment than Bellevue Healthcare. However, Gear4music Plc is 2.78 times more volatile than Bellevue Healthcare Trust. It trades about 0.04 of its potential returns per unit of risk. Bellevue Healthcare Trust is currently generating about 0.0 per unit of risk. If you would invest 10,850 in Gear4music Plc on September 20, 2024 and sell it today you would earn a total of 6,150 from holding Gear4music Plc or generate 56.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Gear4music Plc vs. Bellevue Healthcare Trust
Performance |
| Timeline |
| Gear4music Plc |
| Bellevue Healthcare Trust |
Gear4music Plc and Bellevue Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gear4music Plc and Bellevue Healthcare
The main advantage of trading using opposite Gear4music Plc and Bellevue Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear4music Plc position performs unexpectedly, Bellevue Healthcare 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 Bellevue Healthcare will offset losses from the drop in Bellevue Healthcare's long position.| Gear4music Plc vs. Samsung Electronics Co | Gear4music Plc vs. Samsung Electronics Co | Gear4music Plc vs. Hyundai Motor | Gear4music Plc vs. Toyota Motor Corp |
| Bellevue Healthcare vs. Catalyst Media Group | Bellevue Healthcare vs. CATLIN GROUP | Bellevue Healthcare vs. Tamburi Investment Partners | Bellevue Healthcare vs. Magnora ASA |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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