Correlation Between Vy(r) T and Health Care

Can any of the company-specific risk be diversified away by investing in both Vy(r) T and Health Care 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 Vy(r) T and Health Care into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vy T Rowe and Health Care Fund, you can compare the effects of market volatilities on Vy(r) T and Health Care 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 Vy(r) T with a short position of Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vy(r) T and Health Care.

Diversification Opportunities for Vy(r) T and Health Care

-0.42

Correlation Coefficient

Vy(r) T  Health Care

Very good diversification

The 3 months correlation between Vy(r) and Health is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Vy T Rowe and Health Care Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Fund and Vy(r) T 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 Vy T Rowe are associated (or correlated) with Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Fund has no effect on the direction of Vy(r) T i.e., Vy(r) T and Health Care go up and down completely randomly.

Pair Corralation between Vy(r) T and Health Care

Assuming the 90 days horizon Vy T Rowe is expected to generate 1.64 times more return on investment than Health Care. However, Vy(r) T is 1.64 times more volatile than Health Care Fund. It trades about 0.04 of its potential returns per unit of risk. Health Care Fund is currently generating about 0.02 per unit of risk. If you would invest  698.00  in Vy T Rowe on October 11, 2024 and sell it today you would earn a total of  183.00  from holding Vy T Rowe or generate 26.22% return on investment over 90 days.

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

Vy T Rowe  vs.  Health Care Fund

Vy T Rowe

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vy T Rowe are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vy(r) T may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Health Care Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Health Care Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Health Care is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vy(r) T and Health Care

The main advantage of trading using opposite Vy(r) T and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vy(r) T position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.

The idea behind Vy T Rowe and Health Care Fund 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..