Correlation Between Old Mutual and Target Healthcare
Can any of the company-specific risk be diversified away by investing in both Old Mutual and Target 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 Target 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 Target Healthcare REIT, you can compare the effects of market volatilities on Old Mutual and Target 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 Target Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Mutual and Target Healthcare.
Diversification Opportunities for Old Mutual and Target Healthcare
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Old and Target is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Old Mutual and Target Healthcare REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Healthcare REIT 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 Target Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Healthcare REIT has no effect on the direction of Old Mutual i.e., Old Mutual and Target Healthcare go up and down completely randomly.
Pair Corralation between Old Mutual and Target Healthcare
Assuming the 90 days trading horizon Old Mutual is expected to generate 1.19 times more return on investment than Target Healthcare. However, Old Mutual is 1.19 times more volatile than Target Healthcare REIT. It trades about 0.03 of its potential returns per unit of risk. Target Healthcare REIT is currently generating about -0.12 per unit of risk. If you would invest 5,600 in Old Mutual on September 5, 2024 and sell it today you would earn a total of 50.00 from holding Old Mutual or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Mutual vs. Target Healthcare REIT
Performance |
| Timeline |
| Old Mutual |
| Target Healthcare REIT |
Old Mutual and Target Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Mutual and Target Healthcare
The main advantage of trading using opposite Old Mutual and Target Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Mutual position performs unexpectedly, Target 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 Target Healthcare will offset losses from the drop in Target Healthcare's long position.| Old Mutual vs. Toyota Motor Corp | Old Mutual vs. SoftBank Group Corp | Old Mutual vs. Fannie Mae | Old Mutual vs. Panasonic Corp |
| Target Healthcare vs. Hammerson PLC | Target Healthcare vs. Supermarket Income REIT | Target Healthcare vs. Reckitt Benckiser Group | Target Healthcare vs. Polar Capital Technology |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |