Correlation Between Health Care and Locorr Hedged
Can any of the company-specific risk be diversified away by investing in both Health Care and Locorr Hedged 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 Locorr Hedged 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 Locorr Hedged Core, you can compare the effects of market volatilities on Health Care and Locorr Hedged 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 Locorr Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Locorr Hedged.
Diversification Opportunities for Health Care and Locorr Hedged
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Health and Locorr is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Fund and Locorr Hedged Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Hedged Core 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 Locorr Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Hedged Core has no effect on the direction of Health Care i.e., Health Care and Locorr Hedged go up and down completely randomly.
Pair Corralation between Health Care and Locorr Hedged
Assuming the 90 days horizon Health Care Fund is expected to generate 4.79 times more return on investment than Locorr Hedged. However, Health Care is 4.79 times more volatile than Locorr Hedged Core. It trades about 0.04 of its potential returns per unit of risk. Locorr Hedged Core is currently generating about 0.12 per unit of risk. If you would invest 3,028 in Health Care Fund on September 4, 2024 and sell it today you would earn a total of 22.00 from holding Health Care Fund or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Health Care Fund vs. Locorr Hedged Core
Performance |
| Timeline |
| Health Care Fund |
| Locorr Hedged Core |
Health Care and Locorr Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Locorr Hedged
The main advantage of trading using opposite Health Care and Locorr Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Locorr Hedged 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 Locorr Hedged will offset losses from the drop in Locorr Hedged's long position.| Health Care vs. Dunham Porategovernment Bond | Health Care vs. Government Securities Fund | Health Care vs. Inverse Government Long | Health Care vs. Us Government Securities |
| Locorr Hedged vs. T Rowe Price | Locorr Hedged vs. William Blair Large | Locorr Hedged vs. Qs Global Equity | Locorr Hedged vs. Old Westbury Large |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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