Correlation Between Health Care and Lifex Inflation-protec
Can any of the company-specific risk be diversified away by investing in both Health Care and Lifex Inflation-protec 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 Lifex Inflation-protec 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 Lifex Inflation Protected Income, you can compare the effects of market volatilities on Health Care and Lifex Inflation-protec 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 Lifex Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Lifex Inflation-protec.
Diversification Opportunities for Health Care and Lifex Inflation-protec
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HEALTH and Lifex is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Fund and Lifex Inflation Protected Inco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Inflation-protec 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 Lifex Inflation-protec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Inflation-protec has no effect on the direction of Health Care i.e., Health Care and Lifex Inflation-protec go up and down completely randomly.
Pair Corralation between Health Care and Lifex Inflation-protec
Assuming the 90 days horizon Health Care is expected to generate 1.4 times less return on investment than Lifex Inflation-protec. In addition to that, Health Care is 1.78 times more volatile than Lifex Inflation Protected Income. It trades about 0.04 of its total potential returns per unit of risk. Lifex Inflation Protected Income is currently generating about 0.09 per unit of volatility. If you would invest 2,406 in Lifex Inflation Protected Income on September 1, 2024 and sell it today you would earn a total of 113.00 from holding Lifex Inflation Protected Income or generate 4.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Health Care Fund vs. Lifex Inflation Protected Inco
Performance |
| Timeline |
| Health Care Fund |
| Lifex Inflation-protec |
Health Care and Lifex Inflation-protec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Lifex Inflation-protec
The main advantage of trading using opposite Health Care and Lifex Inflation-protec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Lifex Inflation-protec 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 Lifex Inflation-protec will offset losses from the drop in Lifex Inflation-protec'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 |
| Lifex Inflation-protec vs. The Hartford Healthcare | Lifex Inflation-protec vs. Health Care Fund | Lifex Inflation-protec vs. Fidelity Advisor Health | Lifex Inflation-protec vs. Prudential Health Sciences |
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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