Correlation Between Old Mutual and Spire Healthcare

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Can any of the company-specific risk be diversified away by investing in both Old Mutual and Spire 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 Old Mutual and Spire Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Mutual and Spire Healthcare Group, you can compare the effects of market volatilities on Old Mutual and Spire 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 Old Mutual with a short position of Spire Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Mutual and Spire Healthcare.

Diversification Opportunities for Old Mutual and Spire Healthcare

-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Old and Spire is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Old Mutual and Spire Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Healthcare and Old Mutual 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 Old Mutual are associated (or correlated) with Spire Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Healthcare has no effect on the direction of Old Mutual i.e., Old Mutual and Spire Healthcare go up and down completely randomly.

Pair Corralation between Old Mutual and Spire Healthcare

Assuming the 90 days trading horizon Old Mutual is expected to generate 14.32 times more return on investment than Spire Healthcare. However, Old Mutual is 14.32 times more volatile than Spire Healthcare Group. It trades about 0.13 of its potential returns per unit of risk. Spire Healthcare Group is currently generating about -0.12 per unit of risk. If you would invest  2,106  in Old Mutual on September 12, 2024 and sell it today you would earn a total of  3,684  from holding Old Mutual or generate 174.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Old Mutual  vs.  Spire Healthcare Group

 Performance 
       Timeline  
Old Mutual 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Old Mutual are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Old Mutual exhibited solid returns over the last few months and may actually be approaching a breakup point.
Spire Healthcare 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Spire Healthcare Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Old Mutual and Spire Healthcare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Old Mutual and Spire Healthcare

The main advantage of trading using opposite Old Mutual and Spire Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Mutual position performs unexpectedly, Spire 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 Spire Healthcare will offset losses from the drop in Spire Healthcare's long position.
The idea behind Old Mutual and Spire Healthcare Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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