Correlation Between Global Healthcare and CI Select

Can any of the company-specific risk be diversified away by investing in both Global Healthcare and CI Select 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 Select 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 Select Global, you can compare the effects of market volatilities on Global Healthcare and CI Select 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 Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Healthcare and CI Select.

Diversification Opportunities for Global Healthcare and CI Select

-0.44

Correlation Coefficient

Global Healthcare  CI Select

Very good diversification

The 3 months correlation between Global and 0P000075PH is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Global Healthcare Income and CI Select Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Select Global 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 Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Select Global has no effect on the direction of Global Healthcare i.e., Global Healthcare and CI Select go up and down completely randomly.

Pair Corralation between Global Healthcare and CI Select

Assuming the 90 days trading horizon Global Healthcare Income is expected to under-perform the CI Select. In addition to that, Global Healthcare is 1.05 times more volatile than CI Select Global. It trades about -0.27 of its total potential returns per unit of risk. CI Select Global is currently generating about -0.07 per unit of volatility. If you would invest  2,904  in CI Select Global on October 10, 2024 and sell it today you would lose (27.00) from holding CI Select Global or give up 0.93% of portfolio value over 90 days.

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

Global Healthcare Income  vs.  CI Select Global

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 latest weak performance, the Fund's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

CI Select Global

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CI Select Global are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, CI Select is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Healthcare and CI Select

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

The idea behind Global Healthcare Income and CI Select Global 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.