Correlation Between NorthWest Healthcare and Cogeco Communications

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

Diversification Opportunities for NorthWest Healthcare and Cogeco Communications

0.08

Correlation Coefficient

NorthWest Healthcare  Cogeco Communications

Significant diversification

The 3 months correlation between NorthWest and Cogeco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding NorthWest Healthcare Propertie and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications 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 Cogeco Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogeco Communications has no effect on the direction of NorthWest Healthcare i.e., NorthWest Healthcare and Cogeco Communications go up and down completely randomly.

Pair Corralation between NorthWest Healthcare and Cogeco Communications

Assuming the 90 days trading horizon NorthWest Healthcare is expected to generate 21.1 times less return on investment than Cogeco Communications. In addition to that, NorthWest Healthcare is 1.11 times more volatile than Cogeco Communications. It trades about 0.01 of its total potential returns per unit of risk. Cogeco Communications is currently generating about 0.15 per unit of volatility. If you would invest  5,022  in Cogeco Communications on September 26, 2024 and sell it today you would earn a total of  1,592  from holding Cogeco Communications or generate 31.7% return on investment over 90 days.

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

NorthWest Healthcare Propertie  vs.  Cogeco Communications

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 unfluctuating performance in the last few months, the Stock's technical indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Cogeco Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cogeco Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cogeco Communications is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NorthWest Healthcare and Cogeco Communications

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

The idea behind NorthWest Healthcare Properties and Cogeco Communications 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.