Correlation Between Target Healthcare and Old Mutual
Can any of the company-specific risk be diversified away by investing in both Target Healthcare and Old Mutual 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 Old Mutual 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 Old Mutual, you can compare the effects of market volatilities on Target Healthcare and Old Mutual 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 Old Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Healthcare and Old Mutual.
Diversification Opportunities for Target Healthcare and Old Mutual
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Target and Old is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Target Healthcare REIT and Old Mutual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Mutual 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 Old Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Mutual has no effect on the direction of Target Healthcare i.e., Target Healthcare and Old Mutual go up and down completely randomly.
Pair Corralation between Target Healthcare and Old Mutual
Assuming the 90 days trading horizon Target Healthcare is expected to generate 51.55 times less return on investment than Old Mutual. But when comparing it to its historical volatility, Target Healthcare REIT is 15.88 times less risky than Old Mutual. It trades about 0.04 of its potential returns per unit of risk. Old Mutual is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,106 in Old Mutual on September 12, 2024 and sell it today you would earn a total of 3,684 from holding Old Mutual or generate 174.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target Healthcare REIT vs. Old Mutual
Performance |
| Timeline |
| Target Healthcare REIT |
| Old Mutual |
Target Healthcare and Old Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target Healthcare and Old Mutual
The main advantage of trading using opposite Target Healthcare and Old Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Healthcare position performs unexpectedly, Old Mutual 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 Old Mutual will offset losses from the drop in Old Mutual's long position.| Target Healthcare vs. Vulcan Materials Co | Target Healthcare vs. Summit Materials Cl | Target Healthcare vs. Aeorema Communications Plc | Target Healthcare vs. Verizon Communications |
| Old Mutual vs. Blackstone Loan Financing | Old Mutual vs. Spirent Communications plc | Old Mutual vs. Verizon Communications | Old Mutual vs. Cairo Communication SpA |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |