Correlation Between Induction Healthcare and Litigation Capital
Can any of the company-specific risk be diversified away by investing in both Induction Healthcare and Litigation Capital 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 Litigation Capital 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 Litigation Capital Management, you can compare the effects of market volatilities on Induction Healthcare and Litigation Capital 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Induction Healthcare and Litigation Capital.
Diversification Opportunities for Induction Healthcare and Litigation Capital
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Induction and Litigation is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare Group and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of Induction Healthcare i.e., Induction Healthcare and Litigation Capital go up and down completely randomly.
Pair Corralation between Induction Healthcare and Litigation Capital
Assuming the 90 days trading horizon Induction Healthcare Group is expected to generate 5.14 times more return on investment than Litigation Capital. However, Induction Healthcare is 5.14 times more volatile than Litigation Capital Management. It trades about 0.21 of its potential returns per unit of risk. Litigation Capital Management is currently generating about 0.18 per unit of risk. If you would invest 750.00 in Induction Healthcare Group on August 29, 2024 and sell it today you would earn a total of 150.00 from holding Induction Healthcare Group or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Induction Healthcare Group vs. Litigation Capital Management
Performance |
| Timeline |
| Induction Healthcare |
| Litigation Capital |
Induction Healthcare and Litigation Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Induction Healthcare and Litigation Capital
The main advantage of trading using opposite Induction Healthcare and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Induction Healthcare position performs unexpectedly, Litigation Capital 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 Litigation Capital will offset losses from the drop in Litigation Capital's long position.| Induction Healthcare vs. Home Depot | Induction Healthcare vs. Weiss Korea Opportunity | Induction Healthcare vs. Chrysalis Investments | Induction Healthcare vs. Coca Cola Co |
| Litigation Capital vs. Bisichi Mining PLC | Litigation Capital vs. Porvair plc | Litigation Capital vs. Fair Oaks Income | Litigation Capital vs. Delta Air Lines |
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 Stocks Directory module to find actively traded stocks across global markets.
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