Correlation Between NorthWest Healthcare and Corus Entertainment

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

Diversification Opportunities for NorthWest Healthcare and Corus Entertainment

0.86

Correlation Coefficient

NorthWest Healthcare  Corus Entertainment

Very poor diversification

The 3 months correlation between NorthWest and Corus is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NorthWest Healthcare Propertie and Corus Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corus Entertainment 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 Corus Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corus Entertainment has no effect on the direction of NorthWest Healthcare i.e., NorthWest Healthcare and Corus Entertainment go up and down completely randomly.

Pair Corralation between NorthWest Healthcare and Corus Entertainment

Assuming the 90 days trading horizon NorthWest Healthcare Properties is expected to under-perform the Corus Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, NorthWest Healthcare Properties is 6.42 times less risky than Corus Entertainment. The stock trades about -0.11 of its potential returns per unit of risk. The Corus Entertainment is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Corus Entertainment on September 12, 2024 and sell it today you would lose (2.00) from holding Corus Entertainment or give up 15.38% of portfolio value over 90 days.

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

NorthWest Healthcare Propertie  vs.  Corus Entertainment

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.

Corus Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corus Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Corus Entertainment is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NorthWest Healthcare and Corus Entertainment

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

The idea behind NorthWest Healthcare Properties and Corus Entertainment 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.