Correlation Between NorthWest Healthcare and Fortis

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

Diversification Opportunities for NorthWest Healthcare and Fortis

-0.31

Correlation Coefficient

NorthWest Healthcare  Fortis

Very good diversification

The 3 months correlation between NorthWest and Fortis is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding NorthWest Healthcare Propertie and Fortis Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortis Inc 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 Fortis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortis Inc has no effect on the direction of NorthWest Healthcare i.e., NorthWest Healthcare and Fortis go up and down completely randomly.

Pair Corralation between NorthWest Healthcare and Fortis

Assuming the 90 days trading horizon NorthWest Healthcare Properties is expected to under-perform the Fortis. In addition to that, NorthWest Healthcare is 1.68 times more volatile than Fortis Inc. It trades about 0.0 of its total potential returns per unit of risk. Fortis Inc is currently generating about 0.09 per unit of volatility. If you would invest  5,979  in Fortis Inc on September 3, 2024 and sell it today you would earn a total of  280.00  from holding Fortis Inc or generate 4.68% 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.  Fortis Inc

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 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.

Fortis Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortis Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Fortis 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 Fortis

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

The idea behind NorthWest Healthcare Properties and Fortis Inc 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.