Correlation Between Global Healthcare and CI Global

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

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

Diversification Opportunities for Global Healthcare and CI Global

-0.85

Correlation Coefficient

Global Healthcare  CI Global

Pay attention - limited upside

The 3 months correlation between Global and 0P000070HA is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Global Healthcare Income and CI Global Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Alpha and Global 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 Global Healthcare Income are associated (or correlated) with CI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Global Alpha has no effect on the direction of Global Healthcare i.e., Global Healthcare and CI Global go up and down completely randomly.

Pair Corralation between Global Healthcare and CI Global

Assuming the 90 days trading horizon Global Healthcare Income is expected to under-perform the CI Global. But the fund apears to be less risky and, when comparing its historical volatility, Global Healthcare Income is 1.17 times less risky than CI Global. The fund trades about -0.08 of its potential returns per unit of risk. The CI Global Alpha is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  8,415  in CI Global Alpha on September 3, 2024 and sell it today you would earn a total of  1,965  from holding CI Global Alpha or generate 23.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Global Healthcare Income  vs.  CI Global Alpha

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.

CI Global Alpha

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Global Alpha are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating basic indicators, CI Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Healthcare and CI Global

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

The idea behind Global Healthcare Income and CI Global Alpha 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.