Correlation Between MPH Health and Powerof Canada

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

By analyzing existing cross correlation between MPH Health Care and Power of, you can compare the effects of market volatilities on MPH Health and Powerof Canada 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 MPH Health with a short position of Powerof Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPH Health and Powerof Canada.

Diversification Opportunities for MPH Health and Powerof Canada

-0.3

Correlation Coefficient

MPH Health  Powerof Canada

Very good diversification

The 3 months correlation between MPH and Powerof is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding MPH Health Care and Power of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powerof Canada and MPH 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 MPH Health Care are associated (or correlated) with Powerof Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powerof Canada has no effect on the direction of MPH Health i.e., MPH Health and Powerof Canada go up and down completely randomly.

Pair Corralation between MPH Health and Powerof Canada

Assuming the 90 days trading horizon MPH Health is expected to generate 2.24 times less return on investment than Powerof Canada. But when comparing it to its historical volatility, MPH Health Care is 1.03 times less risky than Powerof Canada. It trades about 0.04 of its potential returns per unit of risk. Power of is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,923  in Power of on December 20, 2024 and sell it today you would earn a total of  197.00  from holding Power of or generate 6.74% return on investment over 90 days.

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

MPH Health Care  vs.  Power of

MPH Health Care

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MPH Health Care are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, MPH Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Powerof Canada

Risk-Adjusted Performance

OK

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

Pair Trading with MPH Health and Powerof Canada

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

The idea behind MPH Health Care and Power of 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.