Correlation Between Global Healthcare and Mawer Global

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

Diversification Opportunities for Global Healthcare and Mawer Global

0.85

Correlation Coefficient

Global Healthcare  Mawer Global

Very poor diversification

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

Pair Corralation between Global Healthcare and Mawer Global

Assuming the 90 days trading horizon Global Healthcare Income is expected to generate 0.93 times more return on investment than Mawer Global. However, Global Healthcare Income is 1.08 times less risky than Mawer Global. It trades about 0.16 of its potential returns per unit of risk. Mawer Global Small is currently generating about 0.11 per unit of risk. If you would invest  758.00  in Global Healthcare Income on December 24, 2024 and sell it today you would earn a total of  54.00  from holding Global Healthcare Income or generate 7.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.08%
Values	Daily Returns

Global Healthcare Income  vs.  Mawer Global Small

Global Healthcare Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Healthcare Income are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Global Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Mawer Global Small

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mawer Global Small are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Mawer Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Healthcare and Mawer Global

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

The idea behind Global Healthcare Income and Mawer Global Small 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.