Correlation Between Target and Hospital Mater

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

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

Diversification Opportunities for Target and Hospital Mater

-0.27

Correlation Coefficient

Target  Hospital Mater

Very good diversification

The 3 months correlation between Target and Hospital is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Target and Hospital Mater Dei in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hospital Mater Dei and Target 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 are associated (or correlated) with Hospital Mater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hospital Mater Dei has no effect on the direction of Target i.e., Target and Hospital Mater go up and down completely randomly.

Pair Corralation between Target and Hospital Mater

Assuming the 90 days trading horizon Target is expected to generate 0.72 times more return on investment than Hospital Mater. However, Target is 1.38 times less risky than Hospital Mater. It trades about 0.08 of its potential returns per unit of risk. Hospital Mater Dei is currently generating about -0.03 per unit of risk. If you would invest  54,486  in Target on April 25, 2025 and sell it today you would earn a total of  5,163  from holding Target or generate 9.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Target  vs.  Hospital Mater Dei

Target

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Target are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Target may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Hospital Mater Dei

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Target and Hospital Mater

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

The idea behind Target and Hospital Mater Dei 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..