Correlation Between Canadian Apartment and NorthWest Healthcare
Can any of the company-specific risk be diversified away by investing in both Canadian Apartment and NorthWest 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 Canadian Apartment and NorthWest Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Apartment Properties and NorthWest Healthcare Properties, you can compare the effects of market volatilities on Canadian Apartment and NorthWest 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 Canadian Apartment with a short position of NorthWest Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Apartment and NorthWest Healthcare.
Diversification Opportunities for Canadian Apartment and NorthWest Healthcare
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Canadian and NorthWest is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Apartment Properties and NorthWest Healthcare Propertie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthWest Healthcare and Canadian Apartment 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 Canadian Apartment Properties are associated (or correlated) with NorthWest Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthWest Healthcare has no effect on the direction of Canadian Apartment i.e., Canadian Apartment and NorthWest Healthcare go up and down completely randomly.
Pair Corralation between Canadian Apartment and NorthWest Healthcare
Assuming the 90 days trading horizon Canadian Apartment Properties is expected to generate 0.97 times more return on investment than NorthWest Healthcare. However, Canadian Apartment Properties is 1.03 times less risky than NorthWest Healthcare. It trades about -0.07 of its potential returns per unit of risk. NorthWest Healthcare Properties is currently generating about -0.24 per unit of risk. If you would invest 4,509 in Canadian Apartment Properties on September 13, 2024 and sell it today you would lose (77.00) from holding Canadian Apartment Properties or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Apartment Properties vs. NorthWest Healthcare Propertie
Performance |
| Timeline |
| Canadian Apartment |
| NorthWest Healthcare |
Canadian Apartment and NorthWest Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Apartment and NorthWest Healthcare
The main advantage of trading using opposite Canadian Apartment and NorthWest Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Apartment position performs unexpectedly, NorthWest 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 NorthWest Healthcare will offset losses from the drop in NorthWest Healthcare's long position.| Canadian Apartment vs. Allied Properties Real | Canadian Apartment vs. Granite Real Estate | Canadian Apartment vs. Boardwalk Real Estate | Canadian Apartment vs. HR Real Estate |
| NorthWest Healthcare vs. Canadian Apartment Properties | NorthWest Healthcare vs. Granite Real Estate | NorthWest Healthcare vs. Choice Properties Real | NorthWest Healthcare vs. HR Real Estate |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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