Correlation Between Worldwide Healthcare and Macfarlane Group
Can any of the company-specific risk be diversified away by investing in both Worldwide Healthcare and Macfarlane Group 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 Macfarlane Group 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 Macfarlane Group PLC, you can compare the effects of market volatilities on Worldwide Healthcare and Macfarlane Group 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 Macfarlane Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worldwide Healthcare and Macfarlane Group.
Diversification Opportunities for Worldwide Healthcare and Macfarlane Group
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Worldwide and Macfarlane is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Worldwide Healthcare Trust and Macfarlane Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macfarlane Group PLC 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 Macfarlane Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macfarlane Group PLC has no effect on the direction of Worldwide Healthcare i.e., Worldwide Healthcare and Macfarlane Group go up and down completely randomly.
Pair Corralation between Worldwide Healthcare and Macfarlane Group
Assuming the 90 days trading horizon Worldwide Healthcare Trust is expected to generate 0.59 times more return on investment than Macfarlane Group. However, Worldwide Healthcare Trust is 1.71 times less risky than Macfarlane Group. It trades about 0.03 of its potential returns per unit of risk. Macfarlane Group PLC is currently generating about 0.01 per unit of risk. If you would invest 29,788 in Worldwide Healthcare Trust on September 4, 2024 and sell it today you would earn a total of 3,512 from holding Worldwide Healthcare Trust or generate 11.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worldwide Healthcare Trust vs. Macfarlane Group PLC
Performance |
| Timeline |
| Worldwide Healthcare |
| Macfarlane Group PLC |
Worldwide Healthcare and Macfarlane Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worldwide Healthcare and Macfarlane Group
The main advantage of trading using opposite Worldwide Healthcare and Macfarlane Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worldwide Healthcare position performs unexpectedly, Macfarlane Group 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 Macfarlane Group will offset losses from the drop in Macfarlane Group's long position.| Worldwide Healthcare vs. SupplyMe Capital PLC | Worldwide Healthcare vs. Lloyds Banking Group | Worldwide Healthcare vs. Premier African Minerals | Worldwide Healthcare vs. SANTANDER UK 8 |
| Macfarlane Group vs. Chocoladefabriken Lindt Spruengli | Macfarlane Group vs. National Atomic Co | Macfarlane Group vs. OTP Bank Nyrt | Macfarlane Group vs. Samsung Electronics Co |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |