Correlation Between NorthWest Healthcare and McDonalds Corp
Can any of the company-specific risk be diversified away by investing in both NorthWest Healthcare and McDonalds Corp 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 McDonalds Corp 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 McDonalds Corp CDR, you can compare the effects of market volatilities on NorthWest Healthcare and McDonalds Corp 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 McDonalds Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorthWest Healthcare and McDonalds Corp.
Diversification Opportunities for NorthWest Healthcare and McDonalds Corp
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NorthWest and McDonalds is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding NorthWest Healthcare Propertie and McDonalds Corp CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds Corp CDR 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 McDonalds Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McDonalds Corp CDR has no effect on the direction of NorthWest Healthcare i.e., NorthWest Healthcare and McDonalds Corp go up and down completely randomly.
Pair Corralation between NorthWest Healthcare and McDonalds Corp
Assuming the 90 days trading horizon NorthWest Healthcare Properties is expected to under-perform the McDonalds Corp. In addition to that, NorthWest Healthcare is 2.0 times more volatile than McDonalds Corp CDR. It trades about -0.05 of its total potential returns per unit of risk. McDonalds Corp CDR is currently generating about 0.02 per unit of volatility. If you would invest 2,259 in McDonalds Corp CDR on October 25, 2024 and sell it today you would earn a total of 198.00 from holding McDonalds Corp CDR or generate 8.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorthWest Healthcare Propertie vs. McDonalds Corp CDR
Performance |
| Timeline |
| NorthWest Healthcare |
| McDonalds Corp CDR |
NorthWest Healthcare and McDonalds Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorthWest Healthcare and McDonalds Corp
The main advantage of trading using opposite NorthWest Healthcare and McDonalds Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorthWest Healthcare position performs unexpectedly, McDonalds Corp 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 McDonalds Corp will offset losses from the drop in McDonalds Corp's long position.| NorthWest Healthcare vs. SmartCentres Real Estate | NorthWest Healthcare vs. Dream Industrial Real | NorthWest Healthcare vs. RioCan Real Estate | NorthWest Healthcare vs. Algonquin Power Utilities |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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