Correlation Between P3 Health and Baxter International
Can any of the company-specific risk be diversified away by investing in both P3 Health and Baxter International 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 P3 Health and Baxter International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between P3 Health Partners and Baxter International, you can compare the effects of market volatilities on P3 Health and Baxter International 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 P3 Health with a short position of Baxter International. Check out your portfolio center. Please also check ongoing floating volatility patterns of P3 Health and Baxter International.
Diversification Opportunities for P3 Health and Baxter International
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PIIIW and Baxter is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding P3 Health Partners and Baxter International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baxter International and P3 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 P3 Health Partners are associated (or correlated) with Baxter International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baxter International has no effect on the direction of P3 Health i.e., P3 Health and Baxter International go up and down completely randomly.
Pair Corralation between P3 Health and Baxter International
Assuming the 90 days horizon P3 Health Partners is expected to generate 121.84 times more return on investment than Baxter International. However, P3 Health is 121.84 times more volatile than Baxter International. It trades about 0.19 of its potential returns per unit of risk. Baxter International is currently generating about 0.02 per unit of risk. If you would invest 5.48 in P3 Health Partners on September 4, 2024 and sell it today you would lose (4.28) from holding P3 Health Partners or give up 78.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 51.2% |
| Values | Daily Returns |
P3 Health Partners vs. Baxter International
Performance |
| Timeline |
| P3 Health Partners |
| Baxter International |
P3 Health and Baxter International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with P3 Health and Baxter International
The main advantage of trading using opposite P3 Health and Baxter International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if P3 Health position performs unexpectedly, Baxter International 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 Baxter International will offset losses from the drop in Baxter International's long position.| P3 Health vs. Baxter International | P3 Health vs. West Pharmaceutical Services | P3 Health vs. ResMed Inc | P3 Health vs. The Cooper Companies, |
| Baxter International vs. Embecta Corp | Baxter International vs. West Pharmaceutical Services | Baxter International vs. ResMed Inc | Baxter International vs. The Cooper Companies, |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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