Correlation Between Rogers Communications and Northview Residential

Can any of the company-specific risk be diversified away by investing in both Rogers Communications and Northview Residential 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 Rogers Communications and Northview Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rogers Communications and Northview Residential REIT, you can compare the effects of market volatilities on Rogers Communications and Northview Residential 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 Rogers Communications with a short position of Northview Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rogers Communications and Northview Residential.

Diversification Opportunities for Rogers Communications and Northview Residential

0.87

Correlation Coefficient

Rogers Communications  Northview Residential

Very poor diversification

The 3 months correlation between Rogers and Northview is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Rogers Communications and Northview Residential REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northview Residential and Rogers Communications 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 Rogers Communications are associated (or correlated) with Northview Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northview Residential has no effect on the direction of Rogers Communications i.e., Rogers Communications and Northview Residential go up and down completely randomly.

Pair Corralation between Rogers Communications and Northview Residential

Assuming the 90 days trading horizon Rogers Communications is expected to under-perform the Northview Residential. But the stock apears to be less risky and, when comparing its historical volatility, Rogers Communications is 1.33 times less risky than Northview Residential. The stock trades about -0.03 of its potential returns per unit of risk. The Northview Residential REIT is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,696  in Northview Residential REIT on September 4, 2024 and sell it today you would lose (1.00) from holding Northview Residential REIT or give up 0.06% of portfolio value over 90 days.

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

Rogers Communications  vs.  Northview Residential REIT

Rogers Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Rogers Communications is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Northview Residential

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northview Residential REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Northview Residential is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rogers Communications and Northview Residential

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

The idea behind Rogers Communications and Northview Residential REIT 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.