Correlation Between GE HealthCare and Haleon Plc
Can any of the company-specific risk be diversified away by investing in both GE HealthCare and Haleon Plc 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 GE HealthCare and Haleon Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE HealthCare Technologies and Haleon plc, you can compare the effects of market volatilities on GE HealthCare and Haleon Plc 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 GE HealthCare with a short position of Haleon Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE HealthCare and Haleon Plc.
Diversification Opportunities for GE HealthCare and Haleon Plc
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GEHC and Haleon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding GE HealthCare Technologies and Haleon plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haleon plc and GE HealthCare 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 GE HealthCare Technologies are associated (or correlated) with Haleon Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haleon plc has no effect on the direction of GE HealthCare i.e., GE HealthCare and Haleon Plc go up and down completely randomly.
Pair Corralation between GE HealthCare and Haleon Plc
Given the investment horizon of 90 days GE HealthCare Technologies is expected to under-perform the Haleon Plc. In addition to that, GE HealthCare is 1.62 times more volatile than Haleon plc. It trades about -0.24 of its total potential returns per unit of risk. Haleon plc is currently generating about -0.16 per unit of volatility. If you would invest 990.00 in Haleon plc on August 24, 2024 and sell it today you would lose (35.00) from holding Haleon plc or give up 3.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE HealthCare Technologies vs. Haleon plc
Performance |
| Timeline |
| GE HealthCare Techno |
| Haleon plc |
GE HealthCare and Haleon Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE HealthCare and Haleon Plc
The main advantage of trading using opposite GE HealthCare and Haleon Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE HealthCare position performs unexpectedly, Haleon Plc 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 Haleon Plc will offset losses from the drop in Haleon Plc's long position.| GE HealthCare vs. Teladoc | GE HealthCare vs. Veeva Systems Class | GE HealthCare vs. 10X Genomics | GE HealthCare vs. Progyny |
| Haleon Plc vs. Teva Pharma Industries | Haleon Plc vs. Bausch Health Companies | Haleon Plc vs. Zoetis Inc | Haleon Plc vs. Takeda Pharmaceutical Co |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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