Correlation Between Medibank Private and Vitura Health
Can any of the company-specific risk be diversified away by investing in both Medibank Private and Vitura Health 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 Vitura Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medibank Private and Vitura Health Limited, you can compare the effects of market volatilities on Medibank Private and Vitura Health 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 Vitura Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medibank Private and Vitura Health.
Diversification Opportunities for Medibank Private and Vitura Health
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Medibank and Vitura is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Medibank Private and Vitura Health Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitura Health Limited 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 Vitura Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitura Health Limited has no effect on the direction of Medibank Private i.e., Medibank Private and Vitura Health go up and down completely randomly.
Pair Corralation between Medibank Private and Vitura Health
Assuming the 90 days trading horizon Medibank Private is expected to generate 0.21 times more return on investment than Vitura Health. However, Medibank Private is 4.75 times less risky than Vitura Health. It trades about 0.07 of its potential returns per unit of risk. Vitura Health Limited is currently generating about -0.04 per unit of risk. If you would invest 281.00 in Medibank Private on November 5, 2024 and sell it today you would earn a total of 119.00 from holding Medibank Private or generate 42.35% 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. Vitura Health Limited
Performance |
| Timeline |
| Medibank Private |
| Vitura Health Limited |
Medibank Private and Vitura Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medibank Private and Vitura Health
The main advantage of trading using opposite Medibank Private and Vitura Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medibank Private position performs unexpectedly, Vitura Health 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 Vitura Health will offset losses from the drop in Vitura Health's long position.| Medibank Private vs. Galena Mining | Medibank Private vs. M3 Mining | Medibank Private vs. Sky Metals | Medibank Private vs. Super Retail Group |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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