Correlation Between MEDICAL FACILITIES and Northland Power
Can any of the company-specific risk be diversified away by investing in both MEDICAL FACILITIES and Northland Power 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 MEDICAL FACILITIES and Northland Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEDICAL FACILITIES NEW and Northland Power, you can compare the effects of market volatilities on MEDICAL FACILITIES and Northland Power 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 MEDICAL FACILITIES with a short position of Northland Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDICAL FACILITIES and Northland Power.
Diversification Opportunities for MEDICAL FACILITIES and Northland Power
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MEDICAL and Northland is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding MEDICAL FACILITIES NEW and Northland Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northland Power and MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW are associated (or correlated) with Northland Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northland Power has no effect on the direction of MEDICAL FACILITIES i.e., MEDICAL FACILITIES and Northland Power go up and down completely randomly.
Pair Corralation between MEDICAL FACILITIES and Northland Power
Assuming the 90 days horizon MEDICAL FACILITIES NEW is expected to generate 0.99 times more return on investment than Northland Power. However, MEDICAL FACILITIES NEW is 1.01 times less risky than Northland Power. It trades about 0.1 of its potential returns per unit of risk. Northland Power is currently generating about -0.01 per unit of risk. If you would invest 583.00 in MEDICAL FACILITIES NEW on September 14, 2024 and sell it today you would earn a total of 467.00 from holding MEDICAL FACILITIES NEW or generate 80.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEDICAL FACILITIES NEW vs. Northland Power
Performance |
| Timeline |
| MEDICAL FACILITIES NEW |
| Northland Power |
MEDICAL FACILITIES and Northland Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEDICAL FACILITIES and Northland Power
The main advantage of trading using opposite MEDICAL FACILITIES and Northland Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDICAL FACILITIES position performs unexpectedly, Northland Power 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 Northland Power will offset losses from the drop in Northland Power's long position.| MEDICAL FACILITIES vs. Ramsay Health Care | MEDICAL FACILITIES vs. Universal Health Services | MEDICAL FACILITIES vs. Superior Plus Corp | MEDICAL FACILITIES vs. SIVERS SEMICONDUCTORS AB |
| Northland Power vs. Dairy Farm International | Northland Power vs. SIEM OFFSHORE NEW | Northland Power vs. Martin Marietta Materials | Northland Power vs. Rayonier Advanced Materials |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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