Correlation Between Health Care and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Health Care and Growth Fund 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 Health Care and Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Fund and Growth Fund Of, you can compare the effects of market volatilities on Health Care and Growth Fund 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 Health Care with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Growth Fund.
Diversification Opportunities for Health Care and Growth Fund
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Health and Growth is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Fund and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund and Health Care 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 Health Care Fund are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of Health Care i.e., Health Care and Growth Fund go up and down completely randomly.
Pair Corralation between Health Care and Growth Fund
Assuming the 90 days horizon Health Care is expected to generate 50.0 times less return on investment than Growth Fund. But when comparing it to its historical volatility, Health Care Fund is 1.09 times less risky than Growth Fund. It trades about 0.0 of its potential returns per unit of risk. Growth Fund Of is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 6,818 in Growth Fund Of on August 29, 2024 and sell it today you would earn a total of 297.00 from holding Growth Fund Of or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Fund vs. Growth Fund Of
Performance |
| Timeline |
| Health Care Fund |
| Growth Fund |
Health Care and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Growth Fund
The main advantage of trading using opposite Health Care and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund's long position.| Health Care vs. Fidelity Advisor Technology | Health Care vs. Fidelity Advisor Biotechnology | Health Care vs. Fidelity Advisor Financial | Health Care vs. Fidelity Advisor Utilities |
| Growth Fund vs. Deutsche Health And | Growth Fund vs. Highland Longshort Healthcare | Growth Fund vs. The Gabelli Healthcare | Growth Fund vs. Health Care Fund |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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