Correlation Between Black Hills and Viemed Healthcare
Can any of the company-specific risk be diversified away by investing in both Black Hills and Viemed Healthcare 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 Black Hills and Viemed Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Hills and Viemed Healthcare, you can compare the effects of market volatilities on Black Hills and Viemed Healthcare 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 Black Hills with a short position of Viemed Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and Viemed Healthcare.
Diversification Opportunities for Black Hills and Viemed Healthcare
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Black and Viemed is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and Viemed Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viemed Healthcare and Black Hills 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 Black Hills are associated (or correlated) with Viemed Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viemed Healthcare has no effect on the direction of Black Hills i.e., Black Hills and Viemed Healthcare go up and down completely randomly.
Pair Corralation between Black Hills and Viemed Healthcare
Considering the 90-day investment horizon Black Hills is expected to generate 1.15 times less return on investment than Viemed Healthcare. But when comparing it to its historical volatility, Black Hills is 2.12 times less risky than Viemed Healthcare. It trades about 0.11 of its potential returns per unit of risk. Viemed Healthcare is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 748.00 in Viemed Healthcare on September 1, 2024 and sell it today you would earn a total of 119.00 from holding Viemed Healthcare or generate 15.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Hills vs. Viemed Healthcare
Performance |
| Timeline |
| Black Hills |
| Viemed Healthcare |
Black Hills and Viemed Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Hills and Viemed Healthcare
The main advantage of trading using opposite Black Hills and Viemed Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills position performs unexpectedly, Viemed Healthcare 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 Viemed Healthcare will offset losses from the drop in Viemed Healthcare's long position.| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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