Correlation Between LIFE CAPITAL and WHG FINVEST

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

By analyzing existing cross correlation between LIFE CAPITAL PARTNERS and WHG FINVEST SP, you can compare the effects of market volatilities on LIFE CAPITAL and WHG FINVEST 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 LIFE CAPITAL with a short position of WHG FINVEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFE CAPITAL and WHG FINVEST.

Diversification Opportunities for LIFE CAPITAL and WHG FINVEST

-0.77

Correlation Coefficient

LIFE CAPITAL  WHG FINVEST

Pay attention - limited upside

The 3 months correlation between LIFE and WHG is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding LIFE CAPITAL PARTNERS and WHG FINVEST SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHG FINVEST SP and LIFE CAPITAL 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 LIFE CAPITAL PARTNERS are associated (or correlated) with WHG FINVEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHG FINVEST SP has no effect on the direction of LIFE CAPITAL i.e., LIFE CAPITAL and WHG FINVEST go up and down completely randomly.

Pair Corralation between LIFE CAPITAL and WHG FINVEST

Assuming the 90 days trading horizon LIFE CAPITAL PARTNERS is expected to under-perform the WHG FINVEST. In addition to that, LIFE CAPITAL is 3.61 times more volatile than WHG FINVEST SP. It trades about -0.06 of its total potential returns per unit of risk. WHG FINVEST SP is currently generating about 0.18 per unit of volatility. If you would invest  114,600  in WHG FINVEST SP on October 25, 2024 and sell it today you would earn a total of  9,190  from holding WHG FINVEST SP or generate 8.02% return on investment over 90 days.

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

LIFE CAPITAL PARTNERS  vs.  WHG FINVEST SP

LIFE CAPITAL PARTNERS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LIFE CAPITAL PARTNERS has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

WHG FINVEST SP

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WHG FINVEST SP are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak fundamental indicators, WHG FINVEST may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with LIFE CAPITAL and WHG FINVEST

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

The idea behind LIFE CAPITAL PARTNERS and WHG FINVEST SP 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.