Correlation Between SAFETY MEDICAL and Option Care
Can any of the company-specific risk be diversified away by investing in both SAFETY MEDICAL and Option 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 SAFETY MEDICAL and Option Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAFETY MEDICAL PROD and Option Care Health, you can compare the effects of market volatilities on SAFETY MEDICAL and Option 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 SAFETY MEDICAL with a short position of Option Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAFETY MEDICAL and Option Care.
Diversification Opportunities for SAFETY MEDICAL and Option Care
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SAFETY and Option is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SAFETY MEDICAL PROD and Option Care Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Option Care Health and SAFETY MEDICAL 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 SAFETY MEDICAL PROD are associated (or correlated) with Option Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Option Care Health has no effect on the direction of SAFETY MEDICAL i.e., SAFETY MEDICAL and Option Care go up and down completely randomly.
Pair Corralation between SAFETY MEDICAL and Option Care
Assuming the 90 days trading horizon SAFETY MEDICAL PROD is expected to under-perform the Option Care. In addition to that, SAFETY MEDICAL is 1.11 times more volatile than Option Care Health. It trades about -0.36 of its total potential returns per unit of risk. Option Care Health is currently generating about 0.13 per unit of volatility. If you would invest 2,140 in Option Care Health on September 14, 2024 and sell it today you would earn a total of 120.00 from holding Option Care Health or generate 5.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAFETY MEDICAL PROD vs. Option Care Health
Performance |
| Timeline |
| SAFETY MEDICAL PROD |
| Option Care Health |
SAFETY MEDICAL and Option Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAFETY MEDICAL and Option Care
The main advantage of trading using opposite SAFETY MEDICAL and Option Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAFETY MEDICAL position performs unexpectedly, Option 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 Option Care will offset losses from the drop in Option Care's long position.| SAFETY MEDICAL vs. Apple Inc | SAFETY MEDICAL vs. Apple Inc | SAFETY MEDICAL vs. Apple Inc | SAFETY MEDICAL vs. Apple Inc |
| Option Care vs. JD HEALTH INTL | Option Care vs. Fresenius SE Co | Option Care vs. Fresenius Medical Care | Option Care vs. Sonic Healthcare Limited |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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