Correlation Between Locorr Macro and Health Care
Can any of the company-specific risk be diversified away by investing in both Locorr Macro and Health Care 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 Locorr Macro and Health Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Locorr Macro Strategies and Health Care Fund, you can compare the effects of market volatilities on Locorr Macro and Health Care 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 Locorr Macro with a short position of Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Locorr Macro and Health Care.
Diversification Opportunities for Locorr Macro and Health Care
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Locorr and HEALTH is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Locorr Macro Strategies and Health Care Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Fund and Locorr Macro 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 Locorr Macro Strategies are associated (or correlated) with Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Fund has no effect on the direction of Locorr Macro i.e., Locorr Macro and Health Care go up and down completely randomly.
Pair Corralation between Locorr Macro and Health Care
Assuming the 90 days horizon Locorr Macro is expected to generate 5.32 times less return on investment than Health Care. But when comparing it to its historical volatility, Locorr Macro Strategies is 1.59 times less risky than Health Care. It trades about 0.01 of its potential returns per unit of risk. Health Care Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,720 in Health Care Fund on September 1, 2024 and sell it today you would earn a total of 331.00 from holding Health Care Fund or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Locorr Macro Strategies vs. Health Care Fund
Performance |
| Timeline |
| Locorr Macro Strategies |
| Health Care Fund |
Locorr Macro and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Locorr Macro and Health Care
The main advantage of trading using opposite Locorr Macro and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Locorr Macro position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.| Locorr Macro vs. Pnc Emerging Markets | Locorr Macro vs. Artisan Emerging Markets | Locorr Macro vs. Rbc Emerging Markets | Locorr Macro vs. Locorr Market Trend |
| Health Care vs. Banking Fund Class | Health Care vs. Basic Materials Fund | Health Care vs. Biotechnology Fund Class | Health Care vs. Government Long Bond |
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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