Correlation Between Liberty Global and HealthCare
Can any of the company-specific risk be diversified away by investing in both Liberty Global and HealthCare 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 Liberty Global and HealthCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Global PLC and HealthCare, you can compare the effects of market volatilities on Liberty Global and HealthCare 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 Liberty Global with a short position of HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Global and HealthCare.
Diversification Opportunities for Liberty Global and HealthCare
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Liberty and HealthCare is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Global PLC and HealthCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthCare and Liberty Global 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 Liberty Global PLC are associated (or correlated) with HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealthCare has no effect on the direction of Liberty Global i.e., Liberty Global and HealthCare go up and down completely randomly.
Pair Corralation between Liberty Global and HealthCare
Assuming the 90 days horizon Liberty Global PLC is expected to under-perform the HealthCare. In addition to that, Liberty Global is 1.78 times more volatile than HealthCare. It trades about -0.29 of its total potential returns per unit of risk. HealthCare is currently generating about -0.23 per unit of volatility. If you would invest 802.00 in HealthCare on November 1, 2024 and sell it today you would lose (32.00) from holding HealthCare or give up 3.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Liberty Global PLC vs. HealthCare
Performance |
| Timeline |
| Liberty Global PLC |
| HealthCare |
Liberty Global and HealthCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Global and HealthCare
The main advantage of trading using opposite Liberty Global and HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Global position performs unexpectedly, HealthCare 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 HealthCare will offset losses from the drop in HealthCare's long position.| Liberty Global vs. Liberty Global PLC | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Broadband Srs |
| HealthCare vs. The Joint Corp | HealthCare vs. LENSAR Inc | HealthCare vs. Cardinal Health | HealthCare vs. Merit Medical Systems |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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