Correlation Between NorthWest Healthcare and First Majestic

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

By analyzing existing cross correlation between NorthWest Healthcare Properties and First Majestic Silver, you can compare the effects of market volatilities on NorthWest Healthcare and First Majestic 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 NorthWest Healthcare with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorthWest Healthcare and First Majestic.

Diversification Opportunities for NorthWest Healthcare and First Majestic

-0.12

Correlation Coefficient

NorthWest Healthcare  First Majestic

Good diversification

The 3 months correlation between NorthWest and First is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NorthWest Healthcare Propertie and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver and NorthWest 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 NorthWest Healthcare Properties are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of NorthWest Healthcare i.e., NorthWest Healthcare and First Majestic go up and down completely randomly.

Pair Corralation between NorthWest Healthcare and First Majestic

Assuming the 90 days trading horizon NorthWest Healthcare Properties is expected to under-perform the First Majestic. But the stock apears to be less risky and, when comparing its historical volatility, NorthWest Healthcare Properties is 2.85 times less risky than First Majestic. The stock trades about -0.16 of its potential returns per unit of risk. The First Majestic Silver is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  837.00  in First Majestic Silver on September 14, 2024 and sell it today you would earn a total of  45.00  from holding First Majestic Silver or generate 5.38% return on investment over 90 days.

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

NorthWest Healthcare Propertie  vs.  First Majestic Silver

NorthWest Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NorthWest Healthcare Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

First Majestic Silver

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, First Majestic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NorthWest Healthcare and First Majestic

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

The idea behind NorthWest Healthcare Properties and First Majestic Silver 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.