Correlation Between Sp 500 and Health Care
Can any of the company-specific risk be diversified away by investing in both Sp 500 and Health Care 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 Sp 500 and Health Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sp 500 Pure and Health Care Fund, you can compare the effects of market volatilities on Sp 500 and Health Care 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 Sp 500 with a short position of Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp 500 and Health Care.
Diversification Opportunities for Sp 500 and Health Care
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RYAWX and Health is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sp 500 Pure and Health Care Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Fund and Sp 500 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 Sp 500 Pure are associated (or correlated) with Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Fund has no effect on the direction of Sp 500 i.e., Sp 500 and Health Care go up and down completely randomly.
Pair Corralation between Sp 500 and Health Care
Assuming the 90 days horizon Sp 500 Pure is expected to generate 1.43 times more return on investment than Health Care. However, Sp 500 is 1.43 times more volatile than Health Care Fund. It trades about 0.06 of its potential returns per unit of risk. Health Care Fund is currently generating about 0.02 per unit of risk. If you would invest 7,938 in Sp 500 Pure on September 3, 2024 and sell it today you would earn a total of 2,614 from holding Sp 500 Pure or generate 32.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sp 500 Pure vs. Health Care Fund
Performance |
| Timeline |
| Sp 500 Pure |
| Health Care Fund |
Sp 500 and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sp 500 and Health Care
The main advantage of trading using opposite Sp 500 and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp 500 position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.| Sp 500 vs. American Funds The | Sp 500 vs. American Funds The | Sp 500 vs. Growth Fund Of | Sp 500 vs. Growth Fund Of |
| Health Care vs. Ab Global Risk | Health Care vs. Artisan High Income | Health Care vs. Gmo High Yield | Health Care vs. Ab Global Risk |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |