Correlation Between Global Health and Ecofibre
Can any of the company-specific risk be diversified away by investing in both Global Health and Ecofibre 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 Global Health and Ecofibre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Health and Ecofibre, you can compare the effects of market volatilities on Global Health and Ecofibre 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 Global Health with a short position of Ecofibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Health and Ecofibre.
Diversification Opportunities for Global Health and Ecofibre
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and Ecofibre is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Global Health and Ecofibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofibre and Global Health 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 Global Health are associated (or correlated) with Ecofibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofibre has no effect on the direction of Global Health i.e., Global Health and Ecofibre go up and down completely randomly.
Pair Corralation between Global Health and Ecofibre
Assuming the 90 days trading horizon Global Health is expected to generate 0.32 times more return on investment than Ecofibre. However, Global Health is 3.13 times less risky than Ecofibre. It trades about 0.01 of its potential returns per unit of risk. Ecofibre is currently generating about -0.17 per unit of risk. If you would invest 14.00 in Global Health on September 25, 2024 and sell it today you would earn a total of 0.00 from holding Global Health or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Global Health vs. Ecofibre
Performance |
Timeline |
Global Health |
Ecofibre |
Global Health and Ecofibre Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Health and Ecofibre
The main advantage of trading using opposite Global Health and Ecofibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Health position performs unexpectedly, Ecofibre 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 Ecofibre will offset losses from the drop in Ecofibre's long position.Global Health vs. Ecofibre | Global Health vs. iShares Global Healthcare | Global Health vs. Adriatic Metals Plc | Global Health vs. Australian Dairy Farms |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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