Correlation Between Induction Healthcare and Guaranty Trust
Can any of the company-specific risk be diversified away by investing in both Induction Healthcare and Guaranty Trust 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 Induction Healthcare and Guaranty Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Induction Healthcare Group and Guaranty Trust Holding, you can compare the effects of market volatilities on Induction Healthcare and Guaranty Trust 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 Induction Healthcare with a short position of Guaranty Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Induction Healthcare and Guaranty Trust.
Diversification Opportunities for Induction Healthcare and Guaranty Trust
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Induction and Guaranty is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare Group and Guaranty Trust Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guaranty Trust Holding and Induction Healthcare 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 Induction Healthcare Group are associated (or correlated) with Guaranty Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guaranty Trust Holding has no effect on the direction of Induction Healthcare i.e., Induction Healthcare and Guaranty Trust go up and down completely randomly.
Pair Corralation between Induction Healthcare and Guaranty Trust
Assuming the 90 days trading horizon Induction Healthcare Group is expected to under-perform the Guaranty Trust. But the stock apears to be less risky and, when comparing its historical volatility, Induction Healthcare Group is 1.74 times less risky than Guaranty Trust. The stock trades about -0.32 of its potential returns per unit of risk. The Guaranty Trust Holding is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 208.00 in Guaranty Trust Holding on December 1, 2024 and sell it today you would lose (8.00) from holding Guaranty Trust Holding or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Induction Healthcare Group vs. Guaranty Trust Holding
Performance |
| Timeline |
| Induction Healthcare |
| Guaranty Trust Holding |
Induction Healthcare and Guaranty Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Induction Healthcare and Guaranty Trust
The main advantage of trading using opposite Induction Healthcare and Guaranty Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Induction Healthcare position performs unexpectedly, Guaranty Trust 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 Guaranty Trust will offset losses from the drop in Guaranty Trust's long position.| Induction Healthcare vs. InterContinental Hotels Group | Induction Healthcare vs. Finnair Oyj | Induction Healthcare vs. Fair Oaks Income | Induction Healthcare vs. Westlake Chemical Corp |
| Guaranty Trust vs. Aptitude Software Group | Guaranty Trust vs. Edinburgh Investment Trust | Guaranty Trust vs. Livermore Investments Group | Guaranty Trust vs. Aberdeen Diversified Income |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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