Correlation Between Health Biotchnology and Salient Alternative
Can any of the company-specific risk be diversified away by investing in both Health Biotchnology and Salient Alternative 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 Salient Alternative 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 Salient Alternative Beta, you can compare the effects of market volatilities on Health Biotchnology and Salient Alternative 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 Salient Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Biotchnology and Salient Alternative.
Diversification Opportunities for Health Biotchnology and Salient Alternative
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Health and Salient is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Health Biotchnology Portfolio and Salient Alternative Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Alternative Beta 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 Salient Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Alternative Beta has no effect on the direction of Health Biotchnology i.e., Health Biotchnology and Salient Alternative go up and down completely randomly.
Pair Corralation between Health Biotchnology and Salient Alternative
Assuming the 90 days horizon Health Biotchnology is expected to generate 2.92 times less return on investment than Salient Alternative. In addition to that, Health Biotchnology is 1.24 times more volatile than Salient Alternative Beta. It trades about 0.03 of its total potential returns per unit of risk. Salient Alternative Beta is currently generating about 0.11 per unit of volatility. If you would invest 1,052 in Salient Alternative Beta on August 29, 2024 and sell it today you would earn a total of 193.00 from holding Salient Alternative Beta or generate 18.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Biotchnology Portfolio vs. Salient Alternative Beta
Performance |
| Timeline |
| Health Biotchnology |
| Salient Alternative Beta |
Health Biotchnology and Salient Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Biotchnology and Salient Alternative
The main advantage of trading using opposite Health Biotchnology and Salient Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Biotchnology position performs unexpectedly, Salient Alternative 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 Salient Alternative will offset losses from the drop in Salient Alternative's long position.The idea behind Health Biotchnology Portfolio and Salient Alternative Beta pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Salient Alternative vs. Aqr Equity Market | Salient Alternative vs. Barings Emerging Markets | Salient Alternative vs. Artisan Emerging Markets | Salient Alternative vs. Pace International Emerging |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |