Correlation Between NeuPath Health and Extendicare
Can any of the company-specific risk be diversified away by investing in both NeuPath Health and Extendicare 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 NeuPath Health and Extendicare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NeuPath Health and Extendicare, you can compare the effects of market volatilities on NeuPath Health and Extendicare 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 NeuPath Health with a short position of Extendicare. Check out your portfolio center. Please also check ongoing floating volatility patterns of NeuPath Health and Extendicare.
Diversification Opportunities for NeuPath Health and Extendicare
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NeuPath and Extendicare is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding NeuPath Health and Extendicare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extendicare and NeuPath Health 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 NeuPath Health are associated (or correlated) with Extendicare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extendicare has no effect on the direction of NeuPath Health i.e., NeuPath Health and Extendicare go up and down completely randomly.
Pair Corralation between NeuPath Health and Extendicare
Assuming the 90 days trading horizon NeuPath Health is expected to generate 2.2 times less return on investment than Extendicare. In addition to that, NeuPath Health is 2.64 times more volatile than Extendicare. It trades about 0.02 of its total potential returns per unit of risk. Extendicare is currently generating about 0.11 per unit of volatility. If you would invest 684.00 in Extendicare on September 14, 2024 and sell it today you would earn a total of 340.00 from holding Extendicare or generate 49.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NeuPath Health vs. Extendicare
Performance |
| Timeline |
| NeuPath Health |
| Extendicare |
NeuPath Health and Extendicare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NeuPath Health and Extendicare
The main advantage of trading using opposite NeuPath Health and Extendicare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NeuPath Health position performs unexpectedly, Extendicare 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 Extendicare will offset losses from the drop in Extendicare's long position.| NeuPath Health vs. Extendicare | NeuPath Health vs. Sienna Senior Living | NeuPath Health vs. Rogers Sugar | NeuPath Health vs. Chemtrade Logistics Income |
| Extendicare vs. Sienna Senior Living | Extendicare vs. Rogers Sugar | Extendicare vs. Chemtrade Logistics Income | Extendicare vs. Exchange 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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