Correlation Between DRI Healthcare and Stampede Drilling

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

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

Diversification Opportunities for DRI Healthcare and Stampede Drilling

0.11

Correlation Coefficient

DRI Healthcare  Stampede Drilling

Average diversification

The 3 months correlation between DRI and Stampede is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding DRI Healthcare Trust and Stampede Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stampede Drilling and DRI 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 DRI Healthcare Trust are associated (or correlated) with Stampede Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stampede Drilling has no effect on the direction of DRI Healthcare i.e., DRI Healthcare and Stampede Drilling go up and down completely randomly.

Pair Corralation between DRI Healthcare and Stampede Drilling

Assuming the 90 days trading horizon DRI Healthcare Trust is expected to generate 0.48 times more return on investment than Stampede Drilling. However, DRI Healthcare Trust is 2.1 times less risky than Stampede Drilling. It trades about 0.0 of its potential returns per unit of risk. Stampede Drilling is currently generating about -0.05 per unit of risk. If you would invest  820.00  in DRI Healthcare Trust on December 21, 2024 and sell it today you would lose (18.00) from holding DRI Healthcare Trust or give up 2.2% of portfolio value over 90 days.

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

DRI Healthcare Trust  vs.  Stampede Drilling

DRI Healthcare Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days DRI Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DRI Healthcare is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Stampede Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stampede Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with DRI Healthcare and Stampede Drilling

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

The idea behind DRI Healthcare Trust and Stampede Drilling 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.