Correlation Between Health Care and Cavanal Hill
Can any of the company-specific risk be diversified away by investing in both Health Care and Cavanal Hill 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 Cavanal Hill 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 Cavanal Hill Hedged, you can compare the effects of market volatilities on Health Care and Cavanal Hill 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 Cavanal Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Cavanal Hill.
Diversification Opportunities for Health Care and Cavanal Hill
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HEALTH and Cavanal is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Fund and Cavanal Hill Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cavanal Hill Hedged 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 Cavanal Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cavanal Hill Hedged has no effect on the direction of Health Care i.e., Health Care and Cavanal Hill go up and down completely randomly.
Pair Corralation between Health Care and Cavanal Hill
Assuming the 90 days horizon Health Care is expected to generate 1.65 times less return on investment than Cavanal Hill. In addition to that, Health Care is 1.77 times more volatile than Cavanal Hill Hedged. It trades about 0.09 of its total potential returns per unit of risk. Cavanal Hill Hedged is currently generating about 0.27 per unit of volatility. If you would invest 1,125 in Cavanal Hill Hedged on September 1, 2024 and sell it today you would earn a total of 33.00 from holding Cavanal Hill Hedged or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Fund vs. Cavanal Hill Hedged
Performance |
| Timeline |
| Health Care Fund |
| Cavanal Hill Hedged |
Health Care and Cavanal Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Cavanal Hill
The main advantage of trading using opposite Health Care and Cavanal Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Cavanal Hill 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 Cavanal Hill will offset losses from the drop in Cavanal Hill's long position.| Health Care vs. Banking Fund Class | Health Care vs. Basic Materials Fund | Health Care vs. Biotechnology Fund Class | Health Care vs. Government Long Bond |
| Cavanal Hill vs. Baron Health Care | Cavanal Hill vs. Deutsche Health And | Cavanal Hill vs. Delaware Healthcare Fund | Cavanal Hill 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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