Correlation Between Worldwide Healthcare and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Worldwide Healthcare and Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining, you can compare the effects of market volatilities on Worldwide Healthcare and Caledonia Mining 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 Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worldwide Healthcare and Caledonia Mining.
Diversification Opportunities for Worldwide Healthcare and Caledonia Mining
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Worldwide and Caledonia is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Worldwide Healthcare Trust and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Worldwide Healthcare i.e., Worldwide Healthcare and Caledonia Mining go up and down completely randomly.
Pair Corralation between Worldwide Healthcare and Caledonia Mining
Assuming the 90 days trading horizon Worldwide Healthcare Trust is expected to generate 0.4 times more return on investment than Caledonia Mining. However, Worldwide Healthcare Trust is 2.47 times less risky than Caledonia Mining. It trades about 0.06 of its potential returns per unit of risk. Caledonia Mining is currently generating about 0.01 per unit of risk. If you would invest 29,235 in Worldwide Healthcare Trust on September 14, 2024 and sell it today you would earn a total of 3,665 from holding Worldwide Healthcare Trust or generate 12.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worldwide Healthcare Trust vs. Caledonia Mining
Performance |
| Timeline |
| Worldwide Healthcare |
| Caledonia Mining |
Worldwide Healthcare and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worldwide Healthcare and Caledonia Mining
The main advantage of trading using opposite Worldwide Healthcare and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worldwide Healthcare position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Worldwide Healthcare vs. British American Tobacco | Worldwide Healthcare vs. CleanTech Lithium plc | Worldwide Healthcare vs. Scandinavian Tobacco Group | Worldwide Healthcare vs. National Beverage Corp |
| Caledonia Mining vs. Allianz Technology Trust | Caledonia Mining vs. HCA Healthcare | Caledonia Mining vs. Worldwide Healthcare Trust | Caledonia Mining vs. Omega Healthcare Investors |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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