Correlation Between W P and Natural Health
Can any of the company-specific risk be diversified away by investing in both W P and Natural Health 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 W P and Natural Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between W P Carey and Natural Health Trends, you can compare the effects of market volatilities on W P and Natural Health 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 W P with a short position of Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of W P and Natural Health.
Diversification Opportunities for W P and Natural Health
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between WPY and Natural is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding W P Carey and Natural Health Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trends and W P 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 W P Carey are associated (or correlated) with Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trends has no effect on the direction of W P i.e., W P and Natural Health go up and down completely randomly.
Pair Corralation between W P and Natural Health
Assuming the 90 days horizon W P Carey is expected to generate 0.29 times more return on investment than Natural Health. However, W P Carey is 3.46 times less risky than Natural Health. It trades about 0.17 of its potential returns per unit of risk. Natural Health Trends is currently generating about -0.46 per unit of risk. If you would invest 5,202 in W P Carey on September 12, 2024 and sell it today you would earn a total of 150.00 from holding W P Carey or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
W P Carey vs. Natural Health Trends
Performance |
| Timeline |
| W P Carey |
| Natural Health Trends |
W P and Natural Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with W P and Natural Health
The main advantage of trading using opposite W P and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if W P position performs unexpectedly, Natural Health 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 Natural Health will offset losses from the drop in Natural Health's long position.| W P vs. Superior Plus Corp | W P vs. SIVERS SEMICONDUCTORS AB | W P vs. CHINA HUARONG ENERHD 50 | W P vs. NORDIC HALIBUT AS |
| Natural Health vs. Lendlease Group | Natural Health vs. FUYO GENERAL LEASE | Natural Health vs. Ares Management Corp | Natural Health vs. INVITATION HOMES DL |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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