Correlation Between CI Global and Global Healthcare

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

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

Diversification Opportunities for CI Global and Global Healthcare

0.94

Correlation Coefficient

CI Global  Global Healthcare

Almost no diversification

The 3 months correlation between 0P000070H9 and Global is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding CI Global Health and Global Healthcare Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Healthcare Income and CI Global 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 CI Global Health are associated (or correlated) with Global Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Healthcare Income has no effect on the direction of CI Global i.e., CI Global and Global Healthcare go up and down completely randomly.

Pair Corralation between CI Global and Global Healthcare

Assuming the 90 days trading horizon CI Global Health is expected to under-perform the Global Healthcare. But the fund apears to be less risky and, when comparing its historical volatility, CI Global Health is 1.61 times less risky than Global Healthcare. The fund trades about -0.18 of its potential returns per unit of risk. The Global Healthcare Income is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  874.00  in Global Healthcare Income on September 4, 2024 and sell it today you would lose (54.00) from holding Global Healthcare Income or give up 6.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

CI Global Health  vs.  Global Healthcare Income

CI Global Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global Healthcare Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Healthcare Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy technical and fundamental indicators, Global Healthcare is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CI Global and Global Healthcare

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

The idea behind CI Global Health and Global Healthcare Income 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.