Correlation Between Worldwide Healthcare and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Worldwide Healthcare and XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC, you can compare the effects of market volatilities on Worldwide Healthcare and XLMedia PLC 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 XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worldwide Healthcare and XLMedia PLC.
Diversification Opportunities for Worldwide Healthcare and XLMedia PLC
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Worldwide and XLMedia is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Worldwide Healthcare Trust and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Worldwide Healthcare i.e., Worldwide Healthcare and XLMedia PLC go up and down completely randomly.
Pair Corralation between Worldwide Healthcare and XLMedia PLC
Assuming the 90 days trading horizon Worldwide Healthcare Trust is expected to generate 0.28 times more return on investment than XLMedia PLC. However, Worldwide Healthcare Trust is 3.58 times less risky than XLMedia PLC. It trades about -0.15 of its potential returns per unit of risk. XLMedia PLC is currently generating about -0.15 per unit of risk. If you would invest 34,626 in Worldwide Healthcare Trust on October 12, 2024 and sell it today you would lose (2,226) from holding Worldwide Healthcare Trust or give up 6.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worldwide Healthcare Trust vs. XLMedia PLC
Performance |
| Timeline |
| Worldwide Healthcare |
| XLMedia PLC |
Worldwide Healthcare and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worldwide Healthcare and XLMedia PLC
The main advantage of trading using opposite Worldwide Healthcare and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worldwide Healthcare position performs unexpectedly, XLMedia PLC 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| Worldwide Healthcare vs. Impax Asset Management | Worldwide Healthcare vs. Waste Management | Worldwide Healthcare vs. Gaztransport et Technigaz | Worldwide Healthcare vs. Spire Healthcare Group |
| XLMedia PLC vs. Worldwide Healthcare Trust | XLMedia PLC vs. Universal Health Services | XLMedia PLC vs. Spirent Communications plc | XLMedia PLC vs. Telecom Italia SpA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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