Correlation Between Canso Credit and NorthWest Healthcare
Can any of the company-specific risk be diversified away by investing in both Canso Credit and NorthWest Healthcare 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 Canso Credit and NorthWest Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canso Credit Trust and NorthWest Healthcare Properties, you can compare the effects of market volatilities on Canso Credit and NorthWest Healthcare 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 Canso Credit with a short position of NorthWest Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canso Credit and NorthWest Healthcare.
Diversification Opportunities for Canso Credit and NorthWest Healthcare
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Canso and NorthWest is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Canso Credit Trust and NorthWest Healthcare Propertie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthWest Healthcare and Canso Credit 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 Canso Credit Trust are associated (or correlated) with NorthWest Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthWest Healthcare has no effect on the direction of Canso Credit i.e., Canso Credit and NorthWest Healthcare go up and down completely randomly.
Pair Corralation between Canso Credit and NorthWest Healthcare
Assuming the 90 days trading horizon Canso Credit Trust is expected to generate 0.29 times more return on investment than NorthWest Healthcare. However, Canso Credit Trust is 3.41 times less risky than NorthWest Healthcare. It trades about 0.48 of its potential returns per unit of risk. NorthWest Healthcare Properties is currently generating about -0.26 per unit of risk. If you would invest 1,523 in Canso Credit Trust on September 14, 2024 and sell it today you would earn a total of 55.00 from holding Canso Credit Trust or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canso Credit Trust vs. NorthWest Healthcare Propertie
Performance |
| Timeline |
| Canso Credit Trust |
| NorthWest Healthcare |
Canso Credit and NorthWest Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canso Credit and NorthWest Healthcare
The main advantage of trading using opposite Canso Credit and NorthWest Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canso Credit position performs unexpectedly, NorthWest Healthcare 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 NorthWest Healthcare will offset losses from the drop in NorthWest Healthcare's long position.| Canso Credit vs. MINT Income Fund | Canso Credit vs. Canadian High Income | Canso Credit vs. Blue Ribbon Income | Canso Credit vs. Australian REIT Income |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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