Correlation Between Health Care and Investec Global
Can any of the company-specific risk be diversified away by investing in both Health Care and Investec Global 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 Investec Global 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 Investec Global Franchise, you can compare the effects of market volatilities on Health Care and Investec Global 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 Investec Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Investec Global.
Diversification Opportunities for Health Care and Investec Global
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Health and Investec is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Ultrasector and Investec Global Franchise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Global Franchise 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 Investec Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Global Franchise has no effect on the direction of Health Care i.e., Health Care and Investec Global go up and down completely randomly.
Pair Corralation between Health Care and Investec Global
Assuming the 90 days horizon Health Care Ultrasector is expected to generate 2.12 times more return on investment than Investec Global. However, Health Care is 2.12 times more volatile than Investec Global Franchise. It trades about 0.33 of its potential returns per unit of risk. Investec Global Franchise is currently generating about 0.24 per unit of risk. If you would invest 9,938 in Health Care Ultrasector on November 5, 2024 and sell it today you would earn a total of 832.00 from holding Health Care Ultrasector or generate 8.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Ultrasector vs. Investec Global Franchise
Performance |
| Timeline |
| Health Care Ultrasector |
| Investec Global Franchise |
Health Care and Investec Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Investec Global
The main advantage of trading using opposite Health Care and Investec Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Investec Global 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 Investec Global will offset losses from the drop in Investec Global's long position.| Health Care vs. Guggenheim High Yield | Health Care vs. Pace High Yield | Health Care vs. Virtus High Yield | Health Care vs. City National Rochdale |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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