Correlation Between Edgepoint Global and Global Healthcare

Can any of the company-specific risk be diversified away by investing in both Edgepoint Global and Global Healthcare 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 Edgepoint Global and Global Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Edgepoint Global Portfolio and Global Healthcare Income, you can compare the effects of market volatilities on Edgepoint Global and Global Healthcare 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 Edgepoint Global with a short position of Global Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgepoint Global and Global Healthcare.

Diversification Opportunities for Edgepoint Global and Global Healthcare

-0.73

Correlation Coefficient

Edgepoint Global  Global Healthcare

Pay attention - limited upside

The 3 months correlation between Edgepoint and Global is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Edgepoint Global Portfolio and Global Healthcare Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Healthcare Income and Edgepoint Global 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 Edgepoint Global Portfolio are associated (or correlated) with Global Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Healthcare Income has no effect on the direction of Edgepoint Global i.e., Edgepoint Global and Global Healthcare go up and down completely randomly.

Pair Corralation between Edgepoint Global and Global Healthcare

Assuming the 90 days trading horizon Edgepoint Global Portfolio is expected to generate 0.57 times more return on investment than Global Healthcare. However, Edgepoint Global Portfolio is 1.76 times less risky than Global Healthcare. It trades about 0.17 of its potential returns per unit of risk. Global Healthcare Income is currently generating about -0.08 per unit of risk. If you would invest  3,668  in Edgepoint Global Portfolio on September 2, 2024 and sell it today you would earn a total of  249.00  from holding Edgepoint Global Portfolio or generate 6.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Edgepoint Global Portfolio  vs.  Global Healthcare Income

Edgepoint Global Por

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Edgepoint Global Portfolio are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly sluggish forward indicators, Edgepoint Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global Healthcare Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Healthcare Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy technical and fundamental indicators, Global Healthcare is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Edgepoint Global and Global Healthcare

The main advantage of trading using opposite Edgepoint Global and Global Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgepoint Global position performs unexpectedly, Global Healthcare 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 Global Healthcare will offset losses from the drop in Global Healthcare's long position.

The idea behind Edgepoint Global Portfolio and Global Healthcare Income 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.

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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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.