Correlation Between Health Care and Gabelli Healthcare
Can any of the company-specific risk be diversified away by investing in both Health Care and Gabelli 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 Gabelli 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 The Gabelli Healthcare, you can compare the effects of market volatilities on Health Care and Gabelli 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 Gabelli Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Gabelli Healthcare.
Diversification Opportunities for Health Care and Gabelli Healthcare
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between HEALTH and Gabelli is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Fund and The Gabelli Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Gabelli Healthcare 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 Gabelli Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Gabelli Healthcare has no effect on the direction of Health Care i.e., Health Care and Gabelli Healthcare go up and down completely randomly.
Pair Corralation between Health Care and Gabelli Healthcare
Assuming the 90 days horizon Health Care Fund is expected to generate 0.86 times more return on investment than Gabelli Healthcare. However, Health Care Fund is 1.16 times less risky than Gabelli Healthcare. It trades about 0.02 of its potential returns per unit of risk. The Gabelli Healthcare is currently generating about 0.0 per unit of risk. If you would invest 2,863 in Health Care Fund on September 2, 2024 and sell it today you would earn a total of 191.00 from holding Health Care Fund or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Fund vs. The Gabelli Healthcare
Performance |
| Timeline |
| Health Care Fund |
| The Gabelli Healthcare |
Health Care and Gabelli Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Gabelli Healthcare
The main advantage of trading using opposite Health Care and Gabelli Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Gabelli 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 Gabelli Healthcare will offset losses from the drop in Gabelli Healthcare'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 |
| Gabelli Healthcare vs. Vanguard Total Stock | Gabelli Healthcare vs. Vanguard 500 Index | Gabelli Healthcare vs. Vanguard Total Stock | Gabelli Healthcare vs. Vanguard Total Stock |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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