Correlation Between Marchex and HEALTHCARE

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

By analyzing existing cross correlation between Marchex and HEALTHCARE TRUST OF, you can compare the effects of market volatilities on Marchex and 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 Marchex with a short position of HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marchex and HEALTHCARE.

Diversification Opportunities for Marchex and HEALTHCARE

-0.08

Correlation Coefficient

Marchex  HEALTHCARE

Good diversification

The 3 months correlation between Marchex and HEALTHCARE is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and HEALTHCARE TRUST OF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEALTHCARE TRUST and Marchex 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 Marchex are associated (or correlated) with HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEALTHCARE TRUST has no effect on the direction of Marchex i.e., Marchex and HEALTHCARE go up and down completely randomly.

Pair Corralation between Marchex and HEALTHCARE

Given the investment horizon of 90 days Marchex is expected to generate 1.68 times more return on investment than HEALTHCARE. However, Marchex is 1.68 times more volatile than HEALTHCARE TRUST OF. It trades about 0.02 of its potential returns per unit of risk. HEALTHCARE TRUST OF is currently generating about -0.19 per unit of risk. If you would invest  177.00  in Marchex on September 4, 2024 and sell it today you would earn a total of  1.00  from holding Marchex or generate 0.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.95%
Values	Daily Returns

Marchex  vs.  HEALTHCARE TRUST OF

Marchex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marchex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Marchex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

HEALTHCARE TRUST

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEALTHCARE TRUST OF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HEALTHCARE TRUST OF investors.

Pair Trading with Marchex and HEALTHCARE

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

The idea behind Marchex and HEALTHCARE TRUST OF 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.