Correlation Between Health Biotchnology and Frost Kempner
Can any of the company-specific risk be diversified away by investing in both Health Biotchnology and Frost Kempner 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 Biotchnology and Frost Kempner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Biotchnology Portfolio and Frost Kempner Treasury, you can compare the effects of market volatilities on Health Biotchnology and Frost Kempner 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 Biotchnology with a short position of Frost Kempner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Biotchnology and Frost Kempner.
Diversification Opportunities for Health Biotchnology and Frost Kempner
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Health and Frost is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Health Biotchnology Portfolio and Frost Kempner Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frost Kempner Treasury and Health Biotchnology 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 Biotchnology Portfolio are associated (or correlated) with Frost Kempner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frost Kempner Treasury has no effect on the direction of Health Biotchnology i.e., Health Biotchnology and Frost Kempner go up and down completely randomly.
Pair Corralation between Health Biotchnology and Frost Kempner
Assuming the 90 days horizon Health Biotchnology Portfolio is expected to under-perform the Frost Kempner. In addition to that, Health Biotchnology is 8.13 times more volatile than Frost Kempner Treasury. It trades about -0.31 of its total potential returns per unit of risk. Frost Kempner Treasury is currently generating about 0.29 per unit of volatility. If you would invest 841.00 in Frost Kempner Treasury on September 12, 2024 and sell it today you would earn a total of 5.00 from holding Frost Kempner Treasury or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Biotchnology Portfolio vs. Frost Kempner Treasury
Performance |
| Timeline |
| Health Biotchnology |
| Frost Kempner Treasury |
Health Biotchnology and Frost Kempner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Biotchnology and Frost Kempner
The main advantage of trading using opposite Health Biotchnology and Frost Kempner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Biotchnology position performs unexpectedly, Frost Kempner 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 Frost Kempner will offset losses from the drop in Frost Kempner's long position.| Health Biotchnology vs. Vanguard Health Care | Health Biotchnology vs. Vanguard Health Care | Health Biotchnology vs. T Rowe Price | Health Biotchnology vs. T Rowe Price |
| Frost Kempner vs. Allianzgi Health Sciences | Frost Kempner vs. Tekla Healthcare Opportunities | Frost Kempner vs. Vanguard Health Care | Frost Kempner vs. Health Biotchnology Portfolio |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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