Correlation Between Optima Health and Target Healthcare
Can any of the company-specific risk be diversified away by investing in both Optima Health 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 Optima Health and Target Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optima Health plc and Target Healthcare REIT, you can compare the effects of market volatilities on Optima Health 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 Optima Health with a short position of Target Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Target Healthcare.
Diversification Opportunities for Optima Health and Target Healthcare
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Optima and Target is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc 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 Optima Health 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 Optima Health plc 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 Optima Health i.e., Optima Health and Target Healthcare go up and down completely randomly.
Pair Corralation between Optima Health and Target Healthcare
Assuming the 90 days trading horizon Optima Health plc is expected to generate 0.49 times more return on investment than Target Healthcare. However, Optima Health plc is 2.05 times less risky than Target Healthcare. It trades about -0.26 of its potential returns per unit of risk. Target Healthcare REIT is currently generating about -0.15 per unit of risk. If you would invest 16,100 in Optima Health plc on September 3, 2024 and sell it today you would lose (550.00) from holding Optima Health plc or give up 3.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optima Health plc vs. Target Healthcare REIT
Performance |
| Timeline |
| Optima Health plc |
| Target Healthcare REIT |
Optima Health and Target Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Target Healthcare
The main advantage of trading using opposite Optima Health and Target Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health 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.| Optima Health vs. Vulcan Materials Co | Optima Health vs. Morgan Advanced Materials | Optima Health vs. Verizon Communications | Optima Health vs. Zoom Video Communications |
| Target Healthcare vs. Made Tech Group | Target Healthcare vs. Allianz Technology Trust | Target Healthcare vs. AIM ImmunoTech | Target Healthcare vs. TechnipFMC PLC |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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