Correlation Between Stellar and Garofalo Health
Can any of the company-specific risk be diversified away by investing in both Stellar and Garofalo 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 Stellar and Garofalo Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and Garofalo Health Care, you can compare the effects of market volatilities on Stellar and Garofalo 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 Stellar with a short position of Garofalo Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and Garofalo Health.
Diversification Opportunities for Stellar and Garofalo Health
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Stellar and Garofalo is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Garofalo Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garofalo Health Care and Stellar 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 Stellar are associated (or correlated) with Garofalo Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garofalo Health Care has no effect on the direction of Stellar i.e., Stellar and Garofalo Health go up and down completely randomly.
Pair Corralation between Stellar and Garofalo Health
Assuming the 90 days trading horizon Stellar is expected to generate 6.11 times more return on investment than Garofalo Health. However, Stellar is 6.11 times more volatile than Garofalo Health Care. It trades about -0.02 of its potential returns per unit of risk. Garofalo Health Care is currently generating about -0.12 per unit of risk. If you would invest 43.00 in Stellar on October 12, 2024 and sell it today you would lose (4.00) from holding Stellar or give up 9.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Stellar vs. Garofalo Health Care
Performance |
| Timeline |
| Stellar |
| Garofalo Health Care |
Stellar and Garofalo Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and Garofalo Health
The main advantage of trading using opposite Stellar and Garofalo Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar position performs unexpectedly, Garofalo 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 Garofalo Health will offset losses from the drop in Garofalo Health's long position.The idea behind Stellar and Garofalo Health Care pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Garofalo Health vs. Japan Tobacco | Garofalo Health vs. CHINA EDUCATION GROUP | Garofalo Health vs. betterU Education Corp | Garofalo Health vs. Strategic Education |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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