Correlation Between Medibank Private and CSL
Can any of the company-specific risk be diversified away by investing in both Medibank Private and CSL 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 Medibank Private and CSL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medibank Private and CSL, you can compare the effects of market volatilities on Medibank Private and CSL 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 Medibank Private with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medibank Private and CSL.
Diversification Opportunities for Medibank Private and CSL
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Medibank and CSL is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Medibank Private and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL and Medibank Private 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 Medibank Private are associated (or correlated) with CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL has no effect on the direction of Medibank Private i.e., Medibank Private and CSL go up and down completely randomly.
Pair Corralation between Medibank Private and CSL
Assuming the 90 days trading horizon Medibank Private is expected to generate 1.01 times more return on investment than CSL. However, Medibank Private is 1.01 times more volatile than CSL. It trades about 0.11 of its potential returns per unit of risk. CSL is currently generating about 0.01 per unit of risk. If you would invest 369.00 in Medibank Private on October 11, 2024 and sell it today you would earn a total of 15.00 from holding Medibank Private or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medibank Private vs. CSL
Performance |
| Timeline |
| Medibank Private |
| CSL |
Medibank Private and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medibank Private and CSL
The main advantage of trading using opposite Medibank Private and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medibank Private position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.| Medibank Private vs. Health and Plant | Medibank Private vs. Healthco Healthcare and | Medibank Private vs. Metro Mining | Medibank Private vs. Apiam Animal Health |
| CSL vs. Sandon Capital Investments | CSL vs. Australian Agricultural | CSL vs. Premier Investments | CSL vs. Australian Strategic Materials |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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