Correlation Between NorthWest Healthcare and Pan American

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

Diversification Opportunities for NorthWest Healthcare and Pan American

0.71

Correlation Coefficient

NorthWest Healthcare  Pan American

Poor diversification

The 3 months correlation between NorthWest and Pan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding NorthWest Healthcare Propertie and Pan American Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan American Silver 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 Pan American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan American Silver has no effect on the direction of NorthWest Healthcare i.e., NorthWest Healthcare and Pan American go up and down completely randomly.

Pair Corralation between NorthWest Healthcare and Pan American

Assuming the 90 days trading horizon NorthWest Healthcare is expected to generate 17.36 times less return on investment than Pan American. But when comparing it to its historical volatility, NorthWest Healthcare Properties is 2.02 times less risky than Pan American. It trades about 0.02 of its potential returns per unit of risk. Pan American Silver is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,975  in Pan American Silver on October 25, 2024 and sell it today you would earn a total of  168.00  from holding Pan American Silver or generate 5.65% return on investment over 90 days.

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

NorthWest Healthcare Propertie  vs.  Pan American Silver

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

Pan American Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pan American Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with NorthWest Healthcare and Pan American

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

The idea behind NorthWest Healthcare Properties and Pan American Silver 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.