Correlation Between Health Care and Mainstay Large
Can any of the company-specific risk be diversified away by investing in both Health Care and Mainstay Large 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 Mainstay Large 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 Mainstay Large Cap, you can compare the effects of market volatilities on Health Care and Mainstay Large 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 Mainstay Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Mainstay Large.
Diversification Opportunities for Health Care and Mainstay Large
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Health and Mainstay is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Ultrasector and Mainstay Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Large Cap 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 Mainstay Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Large Cap has no effect on the direction of Health Care i.e., Health Care and Mainstay Large go up and down completely randomly.
Pair Corralation between Health Care and Mainstay Large
Assuming the 90 days horizon Health Care Ultrasector is expected to generate 0.99 times more return on investment than Mainstay Large. However, Health Care Ultrasector is 1.01 times less risky than Mainstay Large. It trades about 0.36 of its potential returns per unit of risk. Mainstay Large Cap is currently generating about 0.13 per unit of risk. If you would invest 9,796 in Health Care Ultrasector on November 3, 2024 and sell it today you would earn a total of 974.00 from holding Health Care Ultrasector or generate 9.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Ultrasector vs. Mainstay Large Cap
Performance |
| Timeline |
| Health Care Ultrasector |
| Mainstay Large Cap |
Health Care and Mainstay Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Mainstay Large
The main advantage of trading using opposite Health Care and Mainstay Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Mainstay Large 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 Mainstay Large will offset losses from the drop in Mainstay Large's long position.| Health Care vs. Vanguard Growth And | Health Care vs. Qs Large Cap | Health Care vs. Federated Emerging Market | Health Care vs. Tfa Alphagen Growth |
| Mainstay Large vs. Baron Health Care | Mainstay Large vs. Allianzgi Health Sciences | Mainstay Large vs. Vanguard Health Care | Mainstay Large vs. Alger Health Sciences |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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