Correlation Between Health Care and Loncar Cancer
Can any of the company-specific risk be diversified away by investing in both Health Care and Loncar Cancer 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 Health Care and Loncar Cancer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Select and Loncar Cancer Immunotherapy, you can compare the effects of market volatilities on Health Care and Loncar Cancer 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 Health Care with a short position of Loncar Cancer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Loncar Cancer.
Diversification Opportunities for Health Care and Loncar Cancer
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Health and Loncar is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Select and Loncar Cancer Immunotherapy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loncar Cancer Immuno and Health Care 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 Health Care Select are associated (or correlated) with Loncar Cancer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loncar Cancer Immuno has no effect on the direction of Health Care i.e., Health Care and Loncar Cancer go up and down completely randomly.
Pair Corralation between Health Care and Loncar Cancer
Considering the 90-day investment horizon Health Care Select is expected to generate 0.37 times more return on investment than Loncar Cancer. However, Health Care Select is 2.71 times less risky than Loncar Cancer. It trades about -0.18 of its potential returns per unit of risk. Loncar Cancer Immunotherapy is currently generating about -0.25 per unit of risk. If you would invest 14,881 in Health Care Select on August 27, 2024 and sell it today you would lose (465.00) from holding Health Care Select or give up 3.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Select vs. Loncar Cancer Immunotherapy
Performance |
| Timeline |
| Health Care Select |
| Loncar Cancer Immuno |
Health Care and Loncar Cancer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Loncar Cancer
The main advantage of trading using opposite Health Care and Loncar Cancer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Loncar Cancer 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 Loncar Cancer will offset losses from the drop in Loncar Cancer's long position.| Health Care vs. Consumer Staples Select | Health Care vs. Industrial Select Sector | Health Care vs. Consumer Discretionary Select | Health Care vs. Utilities Select Sector |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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