Correlation Between PureTech Health and Global Net
Can any of the company-specific risk be diversified away by investing in both PureTech Health and Global Net 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 PureTech Health and Global Net into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PureTech Health plc and Global Net Lease, you can compare the effects of market volatilities on PureTech Health and Global Net 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 PureTech Health with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and Global Net.
Diversification Opportunities for PureTech Health and Global Net
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PureTech and Global is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and PureTech 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 PureTech Health plc are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of PureTech Health i.e., PureTech Health and Global Net go up and down completely randomly.
Pair Corralation between PureTech Health and Global Net
Assuming the 90 days trading horizon PureTech Health plc is expected to generate 1.78 times more return on investment than Global Net. However, PureTech Health is 1.78 times more volatile than Global Net Lease. It trades about 0.13 of its potential returns per unit of risk. Global Net Lease is currently generating about -0.02 per unit of risk. If you would invest 15,540 in PureTech Health plc on September 2, 2024 and sell it today you would earn a total of 1,140 from holding PureTech Health plc or generate 7.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PureTech Health plc vs. Global Net Lease
Performance |
| Timeline |
| PureTech Health plc |
| Global Net Lease |
PureTech Health and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PureTech Health and Global Net
The main advantage of trading using opposite PureTech Health and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureTech Health position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| PureTech Health vs. Home Depot | PureTech Health vs. Weiss Korea Opportunity | PureTech Health vs. River and Mercantile | PureTech Health vs. Sherborne Investors Guernsey |
| Global Net vs. Waste Management | Global Net vs. PureTech Health plc | Global Net vs. Roper Technologies | Global Net vs. Coor Service Management |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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