Correlation Between NorthWest Healthcare and Laurentian Bank
Can any of the company-specific risk be diversified away by investing in both NorthWest Healthcare and Laurentian Bank 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 NorthWest Healthcare and Laurentian Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorthWest Healthcare Properties and Laurentian Bank, you can compare the effects of market volatilities on NorthWest Healthcare and Laurentian Bank 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 NorthWest Healthcare with a short position of Laurentian Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorthWest Healthcare and Laurentian Bank.
Diversification Opportunities for NorthWest Healthcare and Laurentian Bank
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NorthWest and Laurentian is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding NorthWest Healthcare Propertie and Laurentian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurentian Bank and NorthWest Healthcare 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 NorthWest Healthcare Properties are associated (or correlated) with Laurentian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurentian Bank has no effect on the direction of NorthWest Healthcare i.e., NorthWest Healthcare and Laurentian Bank go up and down completely randomly.
Pair Corralation between NorthWest Healthcare and Laurentian Bank
Assuming the 90 days trading horizon NorthWest Healthcare Properties is expected to under-perform the Laurentian Bank. But the stock apears to be less risky and, when comparing its historical volatility, NorthWest Healthcare Properties is 1.41 times less risky than Laurentian Bank. The stock trades about -0.26 of its potential returns per unit of risk. The Laurentian Bank is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 2,682 in Laurentian Bank on September 14, 2024 and sell it today you would earn a total of 345.00 from holding Laurentian Bank or generate 12.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorthWest Healthcare Propertie vs. Laurentian Bank
Performance |
| Timeline |
| NorthWest Healthcare |
| Laurentian Bank |
NorthWest Healthcare and Laurentian Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorthWest Healthcare and Laurentian Bank
The main advantage of trading using opposite NorthWest Healthcare and Laurentian Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorthWest Healthcare position performs unexpectedly, Laurentian Bank 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 Laurentian Bank will offset losses from the drop in Laurentian Bank's long position.| NorthWest Healthcare vs. Canadian Apartment Properties | NorthWest Healthcare vs. Granite Real Estate | NorthWest Healthcare vs. Choice Properties Real | NorthWest Healthcare vs. HR Real Estate |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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