Correlation Between PM Capital and Capitol Health
Can any of the company-specific risk be diversified away by investing in both PM Capital and Capitol 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 PM Capital and Capitol Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PM Capital Global and Capitol Health, you can compare the effects of market volatilities on PM Capital and Capitol 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 PM Capital with a short position of Capitol Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of PM Capital and Capitol Health.
Diversification Opportunities for PM Capital and Capitol Health
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PGF and Capitol is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding PM Capital Global and Capitol Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Health and PM Capital 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 PM Capital Global are associated (or correlated) with Capitol Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Health has no effect on the direction of PM Capital i.e., PM Capital and Capitol Health go up and down completely randomly.
Pair Corralation between PM Capital and Capitol Health
Assuming the 90 days trading horizon PM Capital Global is expected to generate 0.49 times more return on investment than Capitol Health. However, PM Capital Global is 2.06 times less risky than Capitol Health. It trades about -0.04 of its potential returns per unit of risk. Capitol Health is currently generating about -0.03 per unit of risk. If you would invest 230.00 in PM Capital Global on August 29, 2024 and sell it today you would lose (3.00) from holding PM Capital Global or give up 1.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
PM Capital Global vs. Capitol Health
Performance |
| Timeline |
| PM Capital Global |
| Capitol Health |
PM Capital and Capitol Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PM Capital and Capitol Health
The main advantage of trading using opposite PM Capital and Capitol Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PM Capital position performs unexpectedly, Capitol 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 Capitol Health will offset losses from the drop in Capitol Health's long position.| PM Capital vs. Hotel Property Investments | PM Capital vs. Alto Metals | PM Capital vs. Group 6 Metals | PM Capital vs. MFF Capital Investments |
| Capitol Health vs. Westpac Banking | Capitol Health vs. Champion Iron | Capitol Health vs. Ridley | Capitol Health vs. Peel Mining |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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