Correlation Between Health Care and Smallcap World
Can any of the company-specific risk be diversified away by investing in both Health Care and Smallcap World 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 Smallcap World 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 Smallcap World Fund, you can compare the effects of market volatilities on Health Care and Smallcap World 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 Smallcap World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Smallcap World.
Diversification Opportunities for Health Care and Smallcap World
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HEALTH and Smallcap is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Fund and Smallcap World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap World 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 Smallcap World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap World has no effect on the direction of Health Care i.e., Health Care and Smallcap World go up and down completely randomly.
Pair Corralation between Health Care and Smallcap World
If you would invest 3,037 in Health Care Fund on September 2, 2024 and sell it today you would earn a total of 17.00 from holding Health Care Fund or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Health Care Fund vs. Smallcap World Fund
Performance |
| Timeline |
| Health Care Fund |
| Smallcap World |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Health Care and Smallcap World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Smallcap World
The main advantage of trading using opposite Health Care and Smallcap World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Smallcap World 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 Smallcap World will offset losses from the drop in Smallcap World'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 |
| Smallcap World vs. Allianzgi Health Sciences | Smallcap World vs. Health Care Fund | Smallcap World vs. Highland Longshort Healthcare | Smallcap World vs. Deutsche Health And |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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