Correlation Between Worldwide Healthcare and Optima Health
Can any of the company-specific risk be diversified away by investing in both Worldwide Healthcare and Optima 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 Worldwide Healthcare and Optima Health 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 Optima Health plc, you can compare the effects of market volatilities on Worldwide Healthcare and Optima 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 Worldwide Healthcare with a short position of Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worldwide Healthcare and Optima Health.
Diversification Opportunities for Worldwide Healthcare and Optima Health
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Worldwide and Optima is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Worldwide Healthcare Trust and Optima Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Health 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 Optima Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Health plc has no effect on the direction of Worldwide Healthcare i.e., Worldwide Healthcare and Optima Health go up and down completely randomly.
Pair Corralation between Worldwide Healthcare and Optima Health
Assuming the 90 days trading horizon Worldwide Healthcare is expected to generate 4.11 times less return on investment than Optima Health. But when comparing it to its historical volatility, Worldwide Healthcare Trust is 1.46 times less risky than Optima Health. It trades about 0.03 of its potential returns per unit of risk. Optima Health plc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 15,100 in Optima Health plc on August 30, 2024 and sell it today you would earn a total of 600.00 from holding Optima Health plc or generate 3.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 11.34% |
| Values | Daily Returns |
Worldwide Healthcare Trust vs. Optima Health plc
Performance |
| Timeline |
| Worldwide Healthcare |
| Optima Health plc |
Worldwide Healthcare and Optima Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worldwide Healthcare and Optima Health
The main advantage of trading using opposite Worldwide Healthcare and Optima Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worldwide Healthcare position performs unexpectedly, Optima 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 Optima Health will offset losses from the drop in Optima Health's long position.| Worldwide Healthcare vs. Toyota Motor Corp | Worldwide Healthcare vs. Neometals | Worldwide Healthcare vs. Coor Service Management | Worldwide Healthcare vs. Jupiter Fund Management |
| Optima Health vs. Toyota Motor Corp | Optima Health vs. OTP Bank Nyrt | Optima Health vs. Cognizant Technology Solutions | Optima Health vs. Lendinvest PLC |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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