Correlation Between NorthWest Healthcare and Emera Srs

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

Diversification Opportunities for NorthWest Healthcare and Emera Srs

-0.39

Correlation Coefficient

NorthWest Healthcare  Emera Srs

Very good diversification

The 3 months correlation between NorthWest and Emera is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding NorthWest Healthcare Propertie and Emera Srs C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Srs C 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 Emera Srs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emera Srs C has no effect on the direction of NorthWest Healthcare i.e., NorthWest Healthcare and Emera Srs go up and down completely randomly.

Pair Corralation between NorthWest Healthcare and Emera Srs

Assuming the 90 days trading horizon NorthWest Healthcare Properties is expected to generate 3.75 times more return on investment than Emera Srs. However, NorthWest Healthcare is 3.75 times more volatile than Emera Srs C. It trades about 0.22 of its potential returns per unit of risk. Emera Srs C is currently generating about -0.02 per unit of risk. If you would invest  444.00  in NorthWest Healthcare Properties on December 4, 2024 and sell it today you would earn a total of  40.00  from holding NorthWest Healthcare Properties or generate 9.01% 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.  Emera Srs C

NorthWest Healthcare

Risk-Adjusted Performance

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 somewhat strong technical indicators, NorthWest Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Emera Srs C

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emera Srs C are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Emera Srs is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NorthWest Healthcare and Emera Srs

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

The idea behind NorthWest Healthcare Properties and Emera Srs C 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.