Correlation Between Premium Income and WELL Health
Can any of the company-specific risk be diversified away by investing in both Premium Income and WELL 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 Premium Income and WELL Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premium Income and WELL Health Technologies, you can compare the effects of market volatilities on Premium Income and WELL 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 Premium Income with a short position of WELL Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premium Income and WELL Health.
Diversification Opportunities for Premium Income and WELL Health
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Premium and WELL is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Premium Income and WELL Health Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WELL Health Technologies and Premium Income 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 Premium Income are associated (or correlated) with WELL Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WELL Health Technologies has no effect on the direction of Premium Income i.e., Premium Income and WELL Health go up and down completely randomly.
Pair Corralation between Premium Income and WELL Health
Assuming the 90 days trading horizon Premium Income is expected to under-perform the WELL Health. But the stock apears to be less risky and, when comparing its historical volatility, Premium Income is 1.14 times less risky than WELL Health. The stock trades about -0.02 of its potential returns per unit of risk. The WELL Health Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 263.00 in WELL Health Technologies on September 12, 2024 and sell it today you would earn a total of 414.00 from holding WELL Health Technologies or generate 157.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premium Income vs. WELL Health Technologies
Performance |
| Timeline |
| Premium Income |
| WELL Health Technologies |
Premium Income and WELL Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premium Income and WELL Health
The main advantage of trading using opposite Premium Income and WELL Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premium Income position performs unexpectedly, WELL 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 WELL Health will offset losses from the drop in WELL Health's long position.| Premium Income vs. Sprott Physical Gold | Premium Income vs. Brompton Split Banc | Premium Income vs. TDb Split Corp | Premium Income vs. Prime Dividend Corp |
| WELL Health vs. Premium Income | WELL Health vs. E L Financial Corp | WELL Health vs. Fairfax Financial Holdings | WELL Health vs. Fairfax Fin Hld |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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