Correlation Between WELL Health and Bird Construction
Can any of the company-specific risk be diversified away by investing in both WELL Health and Bird Construction 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 WELL Health and Bird Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WELL Health Technologies and Bird Construction, you can compare the effects of market volatilities on WELL Health and Bird Construction 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 WELL Health with a short position of Bird Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of WELL Health and Bird Construction.
Diversification Opportunities for WELL Health and Bird Construction
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WELL and Bird is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding WELL Health Technologies and Bird Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bird Construction and WELL Health 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 WELL Health Technologies are associated (or correlated) with Bird Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bird Construction has no effect on the direction of WELL Health i.e., WELL Health and Bird Construction go up and down completely randomly.
Pair Corralation between WELL Health and Bird Construction
Assuming the 90 days trading horizon WELL Health Technologies is expected to generate 1.08 times more return on investment than Bird Construction. However, WELL Health is 1.08 times more volatile than Bird Construction. It trades about 0.22 of its potential returns per unit of risk. Bird Construction is currently generating about 0.03 per unit of risk. If you would invest 382.00 in WELL Health Technologies on October 31, 2024 and sell it today you would earn a total of 273.00 from holding WELL Health Technologies or generate 71.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WELL Health Technologies vs. Bird Construction
Performance |
| Timeline |
| WELL Health Technologies |
| Bird Construction |
WELL Health and Bird Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WELL Health and Bird Construction
The main advantage of trading using opposite WELL Health and Bird Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WELL Health position performs unexpectedly, Bird Construction 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 Bird Construction will offset losses from the drop in Bird Construction's long position.The idea behind WELL Health Technologies and Bird Construction 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.| Bird Construction vs. Aecon Group | Bird Construction vs. Mullen Group | Bird Construction vs. Wajax | Bird Construction vs. Exchange Income |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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