Correlation Between Target Healthcare and Vienna Insurance

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

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

Diversification Opportunities for Target Healthcare and Vienna Insurance

0.41

Correlation Coefficient

Target Healthcare  Vienna Insurance

Very weak diversification

The 3 months correlation between Target and Vienna is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Target Healthcare REIT and Vienna Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vienna Insurance and Target 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 Target Healthcare REIT are associated (or correlated) with Vienna Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vienna Insurance has no effect on the direction of Target Healthcare i.e., Target Healthcare and Vienna Insurance go up and down completely randomly.

Pair Corralation between Target Healthcare and Vienna Insurance

Assuming the 90 days trading horizon Target Healthcare REIT is expected to under-perform the Vienna Insurance. In addition to that, Target Healthcare is 1.2 times more volatile than Vienna Insurance Group. It trades about -0.03 of its total potential returns per unit of risk. Vienna Insurance Group is currently generating about -0.03 per unit of volatility. If you would invest  3,025  in Vienna Insurance Group on September 14, 2024 and sell it today you would lose (62.00) from holding Vienna Insurance Group or give up 2.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Target Healthcare REIT  vs.  Vienna Insurance Group

Target Healthcare REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Target Healthcare REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Target Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Vienna Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vienna Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vienna Insurance is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Target Healthcare and Vienna Insurance

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

The idea behind Target Healthcare REIT and Vienna Insurance Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.