Correlation Between NorthWest Healthcare and Sun Lif

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

Diversification Opportunities for NorthWest Healthcare and Sun Lif

0.45

Correlation Coefficient

NorthWest Healthcare  Sun Lif

Very weak diversification

The 3 months correlation between NorthWest and Sun is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NorthWest Healthcare Propertie and Sun Lif Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Lif Non 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 Sun Lif. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Lif Non has no effect on the direction of NorthWest Healthcare i.e., NorthWest Healthcare and Sun Lif go up and down completely randomly.

Pair Corralation between NorthWest Healthcare and Sun Lif

Assuming the 90 days trading horizon NorthWest Healthcare Properties is expected to generate 1.23 times more return on investment than Sun Lif. However, NorthWest Healthcare is 1.23 times more volatile than Sun Lif Non. It trades about 0.14 of its potential returns per unit of risk. Sun Lif Non is currently generating about 0.08 per unit of risk. If you would invest  443.00  in NorthWest Healthcare Properties on December 26, 2024 and sell it today you would earn a total of  61.00  from holding NorthWest Healthcare Properties or generate 13.77% return on investment over 90 days.

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

NorthWest Healthcare Propertie  vs.  Sun Lif Non

NorthWest Healthcare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NorthWest Healthcare Properties are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, NorthWest Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Sun Lif Non

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Lif Non are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Sun Lif may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with NorthWest Healthcare and Sun Lif

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

The idea behind NorthWest Healthcare Properties and Sun Lif Non 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.