Correlation Between MEDICAL FACILITIES and COMMONWBK AUSTRSPADRS

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

By analyzing existing cross correlation between MEDICAL FACILITIES NEW and COMMONWBK AUSTRSPADRS, you can compare the effects of market volatilities on MEDICAL FACILITIES and COMMONWBK AUSTRSPADRS 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 MEDICAL FACILITIES with a short position of COMMONWBK AUSTRSPADRS. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDICAL FACILITIES and COMMONWBK AUSTRSPADRS.

Diversification Opportunities for MEDICAL FACILITIES and COMMONWBK AUSTRSPADRS

0.4

Correlation Coefficient

MEDICAL FACILITIES  COMMONWBK AUSTRSPADRS

Very weak diversification

The 3 months correlation between MEDICAL and COMMONWBK is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding MEDICAL FACILITIES NEW and COMMONWBK AUSTRSPADRS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMMONWBK AUSTRSPADRS and MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW are associated (or correlated) with COMMONWBK AUSTRSPADRS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMMONWBK AUSTRSPADRS has no effect on the direction of MEDICAL FACILITIES i.e., MEDICAL FACILITIES and COMMONWBK AUSTRSPADRS go up and down completely randomly.

Pair Corralation between MEDICAL FACILITIES and COMMONWBK AUSTRSPADRS

Assuming the 90 days horizon MEDICAL FACILITIES NEW is expected to generate 1.72 times more return on investment than COMMONWBK AUSTRSPADRS. However, MEDICAL FACILITIES is 1.72 times more volatile than COMMONWBK AUSTRSPADRS. It trades about 0.07 of its potential returns per unit of risk. COMMONWBK AUSTRSPADRS is currently generating about -0.02 per unit of risk. If you would invest  1,044  in MEDICAL FACILITIES NEW on December 2, 2024 and sell it today you would earn a total of  96.00  from holding MEDICAL FACILITIES NEW or generate 9.2% return on investment over 90 days.

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

MEDICAL FACILITIES NEW  vs.  COMMONWBK AUSTRSPADRS

MEDICAL FACILITIES NEW

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MEDICAL FACILITIES NEW are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MEDICAL FACILITIES may actually be approaching a critical reversion point that can send shares even higher in April 2025.

COMMONWBK AUSTRSPADRS

Risk-Adjusted Performance

Very Weak

Over the last 90 days COMMONWBK AUSTRSPADRS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COMMONWBK AUSTRSPADRS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MEDICAL FACILITIES and COMMONWBK AUSTRSPADRS

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

The idea behind MEDICAL FACILITIES NEW and COMMONWBK AUSTRSPADRS 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.