Correlation Between Viemed Healthcare and Magna International

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

By analyzing existing cross correlation between Viemed Healthcare and Magna International, you can compare the effects of market volatilities on Viemed Healthcare and Magna International 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 Viemed Healthcare with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viemed Healthcare and Magna International.

Diversification Opportunities for Viemed Healthcare and Magna International

0.84

Correlation Coefficient

Viemed Healthcare  Magna International

Very poor diversification

The 3 months correlation between Viemed and Magna is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Viemed Healthcare and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and Viemed 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 Viemed Healthcare are associated (or correlated) with Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of Viemed Healthcare i.e., Viemed Healthcare and Magna International go up and down completely randomly.

Pair Corralation between Viemed Healthcare and Magna International

Considering the 90-day investment horizon Viemed Healthcare is expected to generate 0.84 times more return on investment than Magna International. However, Viemed Healthcare is 1.19 times less risky than Magna International. It trades about -0.18 of its potential returns per unit of risk. Magna International is currently generating about -0.18 per unit of risk. If you would invest  805.00  in Viemed Healthcare on December 4, 2024 and sell it today you would lose (52.00) from holding Viemed Healthcare or give up 6.46% of portfolio value over 90 days.

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

Viemed Healthcare  vs.  Magna International

Viemed Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Viemed Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Magna International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magna International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Viemed Healthcare and Magna International

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

The idea behind Viemed Healthcare and Magna International 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.