Correlation Between Premier Health and Extendicare
Can any of the company-specific risk be diversified away by investing in both Premier 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 Premier Health and Extendicare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Health of and Extendicare, you can compare the effects of market volatilities on Premier 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 Premier Health with a short position of Extendicare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Health and Extendicare.
Diversification Opportunities for Premier Health and Extendicare
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Premier and Extendicare is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Premier Health of and Extendicare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extendicare and Premier 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 Premier Health of 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 Premier Health i.e., Premier Health and Extendicare go up and down completely randomly.
Pair Corralation between Premier Health and Extendicare
Assuming the 90 days horizon Premier Health of is expected to under-perform the Extendicare. In addition to that, Premier Health is 4.32 times more volatile than Extendicare. It trades about 0.0 of its total potential returns per unit of risk. Extendicare is currently generating about 0.1 per unit of volatility. If you would invest 589.00 in Extendicare on September 3, 2024 and sell it today you would earn a total of 473.00 from holding Extendicare or generate 80.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Premier Health of vs. Extendicare
Performance |
| Timeline |
| Premier Health |
| Extendicare |
Premier Health and Extendicare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Health and Extendicare
The main advantage of trading using opposite Premier Health and Extendicare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier 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.| Premier Health vs. Dynacor Gold Mines | Premier Health vs. Sangoma Technologies Corp | Premier Health vs. Geodrill Limited | Premier Health vs. Biosyent |
| Extendicare vs. Sienna Senior Living | Extendicare vs. Chartwell Retirement Residences | Extendicare vs. Chemtrade Logistics Income | Extendicare vs. NorthWest Healthcare Properties |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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