Correlation Between NorthWest Healthcare and Wilmington Capital

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

Diversification Opportunities for NorthWest Healthcare and Wilmington Capital

0.63

Correlation Coefficient

NorthWest Healthcare  Wilmington Capital

Poor diversification

The 3 months correlation between NorthWest and Wilmington is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NorthWest Healthcare Propertie and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital 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 Wilmington Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Capital has no effect on the direction of NorthWest Healthcare i.e., NorthWest Healthcare and Wilmington Capital go up and down completely randomly.

Pair Corralation between NorthWest Healthcare and Wilmington Capital

Assuming the 90 days trading horizon NorthWest Healthcare Properties is expected to under-perform the Wilmington Capital. But the stock apears to be less risky and, when comparing its historical volatility, NorthWest Healthcare Properties is 2.03 times less risky than Wilmington Capital. The stock trades about -0.2 of its potential returns per unit of risk. The Wilmington Capital Management is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  250.00  in Wilmington Capital Management on October 26, 2024 and sell it today you would lose (20.00) from holding Wilmington Capital Management or give up 8.0% of portfolio value over 90 days.

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

NorthWest Healthcare Propertie  vs.  Wilmington Capital Management

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.

Wilmington Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmington Capital Management 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with NorthWest Healthcare and Wilmington Capital

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

The idea behind NorthWest Healthcare Properties and Wilmington Capital Management 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.