Correlation Between Worldwide Healthcare and Axfood AB
Can any of the company-specific risk be diversified away by investing in both Worldwide Healthcare and Axfood AB 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 Worldwide Healthcare and Axfood AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worldwide Healthcare Trust and Axfood AB, you can compare the effects of market volatilities on Worldwide Healthcare and Axfood AB 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 Worldwide Healthcare with a short position of Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worldwide Healthcare and Axfood AB.
Diversification Opportunities for Worldwide Healthcare and Axfood AB
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Worldwide and Axfood is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Worldwide Healthcare Trust and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB and Worldwide 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 Worldwide Healthcare Trust are associated (or correlated) with Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Worldwide Healthcare i.e., Worldwide Healthcare and Axfood AB go up and down completely randomly.
Pair Corralation between Worldwide Healthcare and Axfood AB
Assuming the 90 days trading horizon Worldwide Healthcare Trust is expected to under-perform the Axfood AB. In addition to that, Worldwide Healthcare is 1.08 times more volatile than Axfood AB. It trades about -0.21 of its total potential returns per unit of risk. Axfood AB is currently generating about -0.02 per unit of volatility. If you would invest 23,270 in Axfood AB on September 22, 2024 and sell it today you would lose (95.00) from holding Axfood AB or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worldwide Healthcare Trust vs. Axfood AB
Performance |
| Timeline |
| Worldwide Healthcare |
| Axfood AB |
Worldwide Healthcare and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worldwide Healthcare and Axfood AB
The main advantage of trading using opposite Worldwide Healthcare and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worldwide Healthcare position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| Worldwide Healthcare vs. Catalyst Media Group | Worldwide Healthcare vs. CATLIN GROUP | Worldwide Healthcare vs. Tamburi Investment Partners | Worldwide Healthcare vs. Magnora ASA |
| Axfood AB vs. European Metals Holdings | Axfood AB vs. AMG Advanced Metallurgical | Axfood AB vs. United States Steel | Axfood AB vs. Infrastrutture Wireless Italiane |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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