Correlation Between Health Care and Hartford Healthcare
Can any of the company-specific risk be diversified away by investing in both Health Care and Hartford Healthcare 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 Hartford Healthcare 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 Hartford Healthcare Hls, you can compare the effects of market volatilities on Health Care and Hartford Healthcare 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 Hartford Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Hartford Healthcare.
Diversification Opportunities for Health Care and Hartford Healthcare
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Health and Hartford is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Fund and Hartford Healthcare Hls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Healthcare Hls 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 Hartford Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Healthcare Hls has no effect on the direction of Health Care i.e., Health Care and Hartford Healthcare go up and down completely randomly.
Pair Corralation between Health Care and Hartford Healthcare
Assuming the 90 days horizon Health Care Fund is expected to generate 17.62 times more return on investment than Hartford Healthcare. However, Health Care is 17.62 times more volatile than Hartford Healthcare Hls. It trades about 0.05 of its potential returns per unit of risk. Hartford Healthcare Hls is currently generating about 0.02 per unit of risk. If you would invest 3,310 in Health Care Fund on November 27, 2024 and sell it today you would earn a total of 7,621 from holding Health Care Fund or generate 230.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Fund vs. Hartford Healthcare Hls
Performance |
| Timeline |
| Health Care Fund |
| Hartford Healthcare Hls |
Health Care and Hartford Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Hartford Healthcare
The main advantage of trading using opposite Health Care and Hartford Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Hartford Healthcare 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 Hartford Healthcare will offset losses from the drop in Hartford Healthcare's long position.| Health Care vs. Doubleline Global Bond | Health Care vs. T Rowe Price | Health Care vs. Investec Global Franchise | Health Care vs. Qs Global Equity |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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