Correlation Between GoHealth and Arcadium Lithium
Can any of the company-specific risk be diversified away by investing in both GoHealth and Arcadium Lithium 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 GoHealth and Arcadium Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoHealth and Arcadium Lithium plc, you can compare the effects of market volatilities on GoHealth and Arcadium Lithium 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 GoHealth with a short position of Arcadium Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoHealth and Arcadium Lithium.
Diversification Opportunities for GoHealth and Arcadium Lithium
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GoHealth and Arcadium is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding GoHealth and Arcadium Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadium Lithium plc and GoHealth 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 GoHealth are associated (or correlated) with Arcadium Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadium Lithium plc has no effect on the direction of GoHealth i.e., GoHealth and Arcadium Lithium go up and down completely randomly.
Pair Corralation between GoHealth and Arcadium Lithium
Given the investment horizon of 90 days GoHealth is expected to generate 1.02 times less return on investment than Arcadium Lithium. But when comparing it to its historical volatility, GoHealth is 1.07 times less risky than Arcadium Lithium. It trades about 0.01 of its potential returns per unit of risk. Arcadium Lithium plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 602.00 in Arcadium Lithium plc on September 2, 2024 and sell it today you would lose (77.00) from holding Arcadium Lithium plc or give up 12.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GoHealth vs. Arcadium Lithium plc
Performance |
| Timeline |
| GoHealth |
| Arcadium Lithium plc |
GoHealth and Arcadium Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoHealth and Arcadium Lithium
The main advantage of trading using opposite GoHealth and Arcadium Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoHealth position performs unexpectedly, Arcadium Lithium 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 Arcadium Lithium will offset losses from the drop in Arcadium Lithium's long position.| GoHealth vs. eHealth | GoHealth vs. Tian Ruixiang Holdings | GoHealth vs. Huize Holding | GoHealth vs. Selectquote |
| Arcadium Lithium vs. Japan Tobacco ADR | Arcadium Lithium vs. Compania Cervecerias Unidas | Arcadium Lithium vs. GoHealth | Arcadium Lithium vs. Palomar Holdings |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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