Correlation Between North American and Profound Medical
Can any of the company-specific risk be diversified away by investing in both North American and Profound Medical 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 North American and Profound Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Financial and Profound Medical Corp, you can compare the effects of market volatilities on North American and Profound Medical 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 North American with a short position of Profound Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Profound Medical.
Diversification Opportunities for North American and Profound Medical
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between North and Profound is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding North American Financial and Profound Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profound Medical Corp and North American 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 North American Financial are associated (or correlated) with Profound Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profound Medical Corp has no effect on the direction of North American i.e., North American and Profound Medical go up and down completely randomly.
Pair Corralation between North American and Profound Medical
Assuming the 90 days trading horizon North American Financial is expected to generate 0.65 times more return on investment than Profound Medical. However, North American Financial is 1.55 times less risky than Profound Medical. It trades about 0.06 of its potential returns per unit of risk. Profound Medical Corp is currently generating about -0.01 per unit of risk. If you would invest 448.00 in North American Financial on October 27, 2024 and sell it today you would earn a total of 296.00 from holding North American Financial or generate 66.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Financial vs. Profound Medical Corp
Performance |
| Timeline |
| North American Financial |
| Profound Medical Corp |
North American and Profound Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Profound Medical
The main advantage of trading using opposite North American and Profound Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Profound Medical 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 Profound Medical will offset losses from the drop in Profound Medical's long position.| North American vs. Dividend Growth Split | North American vs. Dividend 15 Split | North American vs. Financial 15 Split | North American vs. Dividend 15 Split |
| Profound Medical vs. HLS Therapeutics | Profound Medical vs. Medicenna Therapeutics Corp | Profound Medical vs. Aptose Biosciences |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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