Correlation Between Global Health and Patriot Battery
Can any of the company-specific risk be diversified away by investing in both Global Health and Patriot Battery 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 Global Health and Patriot Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Health and Patriot Battery Metals, you can compare the effects of market volatilities on Global Health and Patriot Battery 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 Global Health with a short position of Patriot Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Health and Patriot Battery.
Diversification Opportunities for Global Health and Patriot Battery
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and Patriot is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Global Health and Patriot Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Battery Metals and Global Health 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 Global Health are associated (or correlated) with Patriot Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Battery Metals has no effect on the direction of Global Health i.e., Global Health and Patriot Battery go up and down completely randomly.
Pair Corralation between Global Health and Patriot Battery
Assuming the 90 days trading horizon Global Health is expected to generate 0.76 times more return on investment than Patriot Battery. However, Global Health is 1.32 times less risky than Patriot Battery. It trades about -0.03 of its potential returns per unit of risk. Patriot Battery Metals is currently generating about -0.27 per unit of risk. If you would invest 14.00 in Global Health on August 30, 2024 and sell it today you would lose (1.00) from holding Global Health or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Health vs. Patriot Battery Metals
Performance |
| Timeline |
| Global Health |
| Patriot Battery Metals |
Global Health and Patriot Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Health and Patriot Battery
The main advantage of trading using opposite Global Health and Patriot Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Health position performs unexpectedly, Patriot Battery 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 Patriot Battery will offset losses from the drop in Patriot Battery's long position.| Global Health vs. Westpac Banking | Global Health vs. Champion Iron | Global Health vs. Ridley | Global Health vs. Peel Mining |
| Patriot Battery vs. Queste Communications | Patriot Battery vs. Regis Healthcare | Patriot Battery vs. Austco Healthcare | Patriot Battery vs. Apiam Animal Health |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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