Correlation Between Induction Healthcare and Bellevue Healthcare

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

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

Diversification Opportunities for Induction Healthcare and Bellevue Healthcare

-0.67

Correlation Coefficient

Induction Healthcare  Bellevue Healthcare

Excellent diversification

The 3 months correlation between Induction and Bellevue is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare Group and Bellevue Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellevue Healthcare Trust and Induction 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 Induction Healthcare Group are associated (or correlated) with Bellevue Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellevue Healthcare Trust has no effect on the direction of Induction Healthcare i.e., Induction Healthcare and Bellevue Healthcare go up and down completely randomly.

Pair Corralation between Induction Healthcare and Bellevue Healthcare

Assuming the 90 days trading horizon Induction Healthcare is expected to generate 1.61 times less return on investment than Bellevue Healthcare. In addition to that, Induction Healthcare is 1.77 times more volatile than Bellevue Healthcare Trust. It trades about 0.01 of its total potential returns per unit of risk. Bellevue Healthcare Trust is currently generating about 0.03 per unit of volatility. If you would invest  14,120  in Bellevue Healthcare Trust on October 6, 2024 and sell it today you would earn a total of  200.00  from holding Bellevue Healthcare Trust or generate 1.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.62%
Values	Daily Returns

Induction Healthcare Group  vs.  Bellevue Healthcare Trust

Induction Healthcare

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Induction Healthcare Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Induction Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bellevue Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bellevue Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bellevue Healthcare is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Induction Healthcare and Bellevue Healthcare

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

The idea behind Induction Healthcare Group and Bellevue Healthcare Trust 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.