Correlation Between Target Healthcare and Optima Health
Can any of the company-specific risk be diversified away by investing in both Target Healthcare and Optima Health 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 Optima Health 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 Optima Health plc, you can compare the effects of market volatilities on Target Healthcare and Optima Health 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 Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Healthcare and Optima Health.
Diversification Opportunities for Target Healthcare and Optima Health
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Target and Optima is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Target Healthcare REIT and Optima Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Health plc 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 Optima Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Health plc has no effect on the direction of Target Healthcare i.e., Target Healthcare and Optima Health go up and down completely randomly.
Pair Corralation between Target Healthcare and Optima Health
Assuming the 90 days trading horizon Target Healthcare is expected to generate 10.87 times less return on investment than Optima Health. But when comparing it to its historical volatility, Target Healthcare REIT is 1.84 times less risky than Optima Health. It trades about 0.02 of its potential returns per unit of risk. Optima Health plc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 18,250 in Optima Health plc on April 25, 2025 and sell it today you would earn a total of 2,150 from holding Optima Health plc or generate 11.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Target Healthcare REIT vs. Optima Health plc
Performance |
Timeline |
Target Healthcare REIT |
Optima Health plc |
Target Healthcare and Optima Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Target Healthcare and Optima Health
The main advantage of trading using opposite Target Healthcare and Optima Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Healthcare position performs unexpectedly, Optima Health 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 Optima Health will offset losses from the drop in Optima Health's long position.Target Healthcare vs. Lundin Mining Corp | Target Healthcare vs. Ion Beam Applications | Target Healthcare vs. Invesco Physical Silver | Target Healthcare vs. Pan American Silver |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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