Correlation Between NorthWest Healthcare and Ascot Resources

Can any of the company-specific risk be diversified away by investing in both NorthWest Healthcare and Ascot Resources 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 Ascot Resources 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 Ascot Resources, you can compare the effects of market volatilities on NorthWest Healthcare and Ascot Resources 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 Ascot Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorthWest Healthcare and Ascot Resources.

Diversification Opportunities for NorthWest Healthcare and Ascot Resources

-0.78

Correlation Coefficient

NorthWest Healthcare  Ascot Resources

Pay attention - limited upside

The 3 months correlation between NorthWest and Ascot is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding NorthWest Healthcare Propertie and Ascot Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascot Resources 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 Ascot Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascot Resources has no effect on the direction of NorthWest Healthcare i.e., NorthWest Healthcare and Ascot Resources go up and down completely randomly.

Pair Corralation between NorthWest Healthcare and Ascot Resources

Assuming the 90 days trading horizon NorthWest Healthcare Properties is expected to generate 0.22 times more return on investment than Ascot Resources. However, NorthWest Healthcare Properties is 4.55 times less risky than Ascot Resources. It trades about 0.14 of its potential returns per unit of risk. Ascot Resources is currently generating about -0.07 per unit of risk. If you would invest  443.00  in NorthWest Healthcare Properties on December 25, 2024 and sell it today you would earn a total of  61.00  from holding NorthWest Healthcare Properties or generate 13.77% return on investment over 90 days.

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

NorthWest Healthcare Propertie  vs.  Ascot Resources

NorthWest Healthcare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NorthWest Healthcare Properties are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, NorthWest Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Ascot Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ascot Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with NorthWest Healthcare and Ascot Resources

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

The idea behind NorthWest Healthcare Properties and Ascot Resources 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.