Correlation Between Inverse High and Health Care
Can any of the company-specific risk be diversified away by investing in both Inverse High and Health Care 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 Inverse High and Health Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse High Yield and Health Care Ultrasector, you can compare the effects of market volatilities on Inverse High and Health Care 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 Inverse High with a short position of Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse High and Health Care.
Diversification Opportunities for Inverse High and Health Care
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Inverse and Health is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Inverse High Yield and Health Care Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Ultrasector and Inverse High 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 Inverse High Yield are associated (or correlated) with Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Ultrasector has no effect on the direction of Inverse High i.e., Inverse High and Health Care go up and down completely randomly.
Pair Corralation between Inverse High and Health Care
Assuming the 90 days horizon Inverse High Yield is expected to generate 0.37 times more return on investment than Health Care. However, Inverse High Yield is 2.7 times less risky than Health Care. It trades about 0.15 of its potential returns per unit of risk. Health Care Ultrasector is currently generating about -0.04 per unit of risk. If you would invest 4,941 in Inverse High Yield on October 14, 2024 and sell it today you would earn a total of 64.00 from holding Inverse High Yield or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse High Yield vs. Health Care Ultrasector
Performance |
| Timeline |
| Inverse High Yield |
| Health Care Ultrasector |
Inverse High and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse High and Health Care
The main advantage of trading using opposite Inverse High and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse High position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.| Inverse High vs. Credit Suisse Multialternative | Inverse High vs. Guggenheim Managed Futures | Inverse High vs. Ab Bond Inflation | Inverse High vs. Nationwide Inflation Protected Securities |
| Health Care vs. Millerhoward High Income | Health Care vs. Inverse High Yield | Health Care vs. Catalystsmh High Income | Health Care vs. Gmo High Yield |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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