Correlation Between North American and Medical Facilities
Can any of the company-specific risk be diversified away by investing in both North American and Medical Facilities 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 Medical Facilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Construction and Medical Facilities, you can compare the effects of market volatilities on North American and Medical Facilities 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 Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Medical Facilities.
Diversification Opportunities for North American and Medical Facilities
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between North and Medical is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities 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 Construction are associated (or correlated) with Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of North American i.e., North American and Medical Facilities go up and down completely randomly.
Pair Corralation between North American and Medical Facilities
Assuming the 90 days trading horizon North American is expected to generate 1.31 times less return on investment than Medical Facilities. In addition to that, North American is 1.61 times more volatile than Medical Facilities. It trades about 0.05 of its total potential returns per unit of risk. Medical Facilities is currently generating about 0.11 per unit of volatility. If you would invest 722.00 in Medical Facilities on September 2, 2024 and sell it today you would earn a total of 848.00 from holding Medical Facilities or generate 117.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Construction vs. Medical Facilities
Performance |
| Timeline |
| North American Const |
| Medical Facilities |
North American and Medical Facilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Medical Facilities
The main advantage of trading using opposite North American and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Medical Facilities 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 Medical Facilities will offset losses from the drop in Medical Facilities' long position.| North American vs. PHX Energy Services | North American vs. CES Energy Solutions | North American vs. Total Energy Services | North American vs. Pason Systems |
| Medical Facilities vs. Extendicare | Medical Facilities vs. Sienna Senior Living | Medical Facilities vs. Rogers Sugar | Medical Facilities vs. Chemtrade Logistics Income |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Transaction History View history of all your transactions and understand their impact on performance |