Correlation Between Ramsay Health and Federal Home
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and Federal Home 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 Ramsay Health and Federal Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ramsay Health Care and Federal Home Loan, you can compare the effects of market volatilities on Ramsay Health and Federal Home 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 Ramsay Health with a short position of Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Federal Home.
Diversification Opportunities for Ramsay Health and Federal Home
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ramsay and Federal is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan and Ramsay 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 Ramsay Health Care are associated (or correlated) with Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of Ramsay Health i.e., Ramsay Health and Federal Home go up and down completely randomly.
Pair Corralation between Ramsay Health and Federal Home
Assuming the 90 days horizon Ramsay Health Care is expected to under-perform the Federal Home. But the stock apears to be less risky and, when comparing its historical volatility, Ramsay Health Care is 3.11 times less risky than Federal Home. The stock trades about -0.28 of its potential returns per unit of risk. The Federal Home Loan is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 128.00 in Federal Home Loan on March 5, 2024 and sell it today you would earn a total of 8.00 from holding Federal Home Loan or generate 6.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Ramsay Health Care vs. Federal Home Loan
Performance |
Timeline |
Ramsay Health Care |
Federal Home Loan |
Ramsay Health and Federal Home Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ramsay Health and Federal Home
The main advantage of trading using opposite Ramsay Health and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, Federal Home 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 Federal Home will offset losses from the drop in Federal Home's long position.Ramsay Health vs. Medicover AB | Ramsay Health vs. Charoen Pokphand Foods | Ramsay Health vs. CITIUS RESOURCES LS 005 | Ramsay Health vs. SIVERS SEMICONDUCTORS AB |
Federal Home vs. CITIUS RESOURCES LS 005 | Federal Home vs. Superior Plus Corp | Federal Home vs. SIVERS SEMICONDUCTORS AB | Federal Home vs. Talanx AG |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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