Correlation Between Capitol Health and Bendigo
Can any of the company-specific risk be diversified away by investing in both Capitol Health and Bendigo 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 Capitol Health and Bendigo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Health and Bendigo And Adelaide, you can compare the effects of market volatilities on Capitol Health and Bendigo 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 Capitol Health with a short position of Bendigo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Health and Bendigo.
Diversification Opportunities for Capitol Health and Bendigo
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Capitol and Bendigo is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Health and Bendigo And Adelaide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bendigo And Adelaide and Capitol Health 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 Capitol Health are associated (or correlated) with Bendigo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bendigo And Adelaide has no effect on the direction of Capitol Health i.e., Capitol Health and Bendigo go up and down completely randomly.
Pair Corralation between Capitol Health and Bendigo
Assuming the 90 days trading horizon Capitol Health is expected to generate 2.08 times more return on investment than Bendigo. However, Capitol Health is 2.08 times more volatile than Bendigo And Adelaide. It trades about 0.1 of its potential returns per unit of risk. Bendigo And Adelaide is currently generating about 0.1 per unit of risk. If you would invest 34.00 in Capitol Health on September 24, 2024 and sell it today you would earn a total of 5.00 from holding Capitol Health or generate 14.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Capitol Health vs. Bendigo And Adelaide
Performance |
Timeline |
Capitol Health |
Bendigo And Adelaide |
Capitol Health and Bendigo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Capitol Health and Bendigo
The main advantage of trading using opposite Capitol Health and Bendigo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Health position performs unexpectedly, Bendigo 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 Bendigo will offset losses from the drop in Bendigo's long position.Capitol Health vs. Saferoads Holdings | Capitol Health vs. Legacy Iron Ore | Capitol Health vs. Aussie Broadband | Capitol Health vs. K2 Asset Management |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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