Correlation Between TARGET and NORTHWELL

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

By analyzing existing cross correlation between TARGET P 7 and NORTHWELL HEALTHCARE INC, you can compare the effects of market volatilities on TARGET and NORTHWELL 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 TARGET with a short position of NORTHWELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of TARGET and NORTHWELL.

Diversification Opportunities for TARGET and NORTHWELL

-0.19

Correlation Coefficient

TARGET  NORTHWELL

Good diversification

The 3 months correlation between TARGET and NORTHWELL is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding TARGET P 7 and NORTHWELL HEALTHCARE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHWELL HEALTHCARE INC and TARGET 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 TARGET P 7 are associated (or correlated) with NORTHWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHWELL HEALTHCARE INC has no effect on the direction of TARGET i.e., TARGET and NORTHWELL go up and down completely randomly.

Pair Corralation between TARGET and NORTHWELL

Assuming the 90 days trading horizon TARGET is expected to generate 2405.02 times less return on investment than NORTHWELL. But when comparing it to its historical volatility, TARGET P 7 is 54.86 times less risky than NORTHWELL. It trades about 0.0 of its potential returns per unit of risk. NORTHWELL HEALTHCARE INC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  8,454  in NORTHWELL HEALTHCARE INC on October 10, 2024 and sell it today you would lose (223.00) from holding NORTHWELL HEALTHCARE INC or give up 2.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	57.36%
Values	Daily Returns

TARGET P 7  vs.  NORTHWELL HEALTHCARE INC

TARGET P 7

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TARGET P 7 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, TARGET is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

NORTHWELL HEALTHCARE INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TARGET and NORTHWELL

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

The idea behind TARGET P 7 and NORTHWELL HEALTHCARE 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.