Correlation Between Target Healthcare and Intermediate Capital
Can any of the company-specific risk be diversified away by investing in both Target Healthcare and Intermediate Capital 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 Target Healthcare and Intermediate Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Healthcare REIT and Intermediate Capital Group, you can compare the effects of market volatilities on Target Healthcare and Intermediate Capital 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 Target Healthcare with a short position of Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Healthcare and Intermediate Capital.
Diversification Opportunities for Target Healthcare and Intermediate Capital
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Target and Intermediate is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Target Healthcare REIT and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital and Target Healthcare 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 Target Healthcare REIT are associated (or correlated) with Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Target Healthcare i.e., Target Healthcare and Intermediate Capital go up and down completely randomly.
Pair Corralation between Target Healthcare and Intermediate Capital
Assuming the 90 days trading horizon Target Healthcare is expected to generate 3.43 times less return on investment than Intermediate Capital. But when comparing it to its historical volatility, Target Healthcare REIT is 1.07 times less risky than Intermediate Capital. It trades about 0.02 of its potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 117,176 in Intermediate Capital Group on October 11, 2024 and sell it today you would earn a total of 87,824 from holding Intermediate Capital Group or generate 74.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Target Healthcare REIT vs. Intermediate Capital Group
Performance |
| Timeline |
| Target Healthcare REIT |
| Intermediate Capital |
Target Healthcare and Intermediate Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target Healthcare and Intermediate Capital
The main advantage of trading using opposite Target Healthcare and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Healthcare position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital's long position.| Target Healthcare vs. Derwent London PLC | Target Healthcare vs. Hammerson PLC | Target Healthcare vs. Workspace Group PLC | Target Healthcare vs. Supermarket Income REIT |
| Intermediate Capital vs. Morgan Advanced Materials | Intermediate Capital vs. Sabre Insurance Group | Intermediate Capital vs. Target Healthcare REIT | Intermediate Capital vs. Vienna Insurance Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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