Correlation Between Health Care and Dana Epiphany
Can any of the company-specific risk be diversified away by investing in both Health Care and Dana Epiphany 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 Health Care and Dana Epiphany into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Ultrasector and Dana Epiphany Esg, you can compare the effects of market volatilities on Health Care and Dana Epiphany 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 Health Care with a short position of Dana Epiphany. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Dana Epiphany.
Diversification Opportunities for Health Care and Dana Epiphany
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Health and Dana is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Ultrasector and Dana Epiphany Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Epiphany Esg and Health Care 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 Health Care Ultrasector are associated (or correlated) with Dana Epiphany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Epiphany Esg has no effect on the direction of Health Care i.e., Health Care and Dana Epiphany go up and down completely randomly.
Pair Corralation between Health Care and Dana Epiphany
Assuming the 90 days horizon Health Care is expected to generate 3.62 times less return on investment than Dana Epiphany. In addition to that, Health Care is 1.22 times more volatile than Dana Epiphany Esg. It trades about 0.01 of its total potential returns per unit of risk. Dana Epiphany Esg is currently generating about 0.07 per unit of volatility. If you would invest 1,236 in Dana Epiphany Esg on October 25, 2024 and sell it today you would earn a total of 367.00 from holding Dana Epiphany Esg or generate 29.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Ultrasector vs. Dana Epiphany Esg
Performance |
| Timeline |
| Health Care Ultrasector |
| Dana Epiphany Esg |
Health Care and Dana Epiphany Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Dana Epiphany
The main advantage of trading using opposite Health Care and Dana Epiphany positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Dana Epiphany 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 Dana Epiphany will offset losses from the drop in Dana Epiphany's long position.| Health Care vs. Qs Global Equity | Health Care vs. Dws Equity Sector | Health Care vs. Enhanced Fixed Income | Health Care vs. Gmo Global Equity |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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