Correlation Between Power Financial and Northview Residential
Can any of the company-specific risk be diversified away by investing in both Power Financial and Northview Residential 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 Power Financial and Northview Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Financial Corp and Northview Residential REIT, you can compare the effects of market volatilities on Power Financial and Northview Residential 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 Power Financial with a short position of Northview Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Financial and Northview Residential.
Diversification Opportunities for Power Financial and Northview Residential
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Power and Northview is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Power Financial Corp and Northview Residential REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northview Residential and Power Financial 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 Power Financial Corp are associated (or correlated) with Northview Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northview Residential has no effect on the direction of Power Financial i.e., Power Financial and Northview Residential go up and down completely randomly.
Pair Corralation between Power Financial and Northview Residential
Assuming the 90 days trading horizon Power Financial Corp is expected to generate 1.48 times more return on investment than Northview Residential. However, Power Financial is 1.48 times more volatile than Northview Residential REIT. It trades about 0.09 of its potential returns per unit of risk. Northview Residential REIT is currently generating about -0.2 per unit of risk. If you would invest 1,664 in Power Financial Corp on November 2, 2024 and sell it today you would earn a total of 51.00 from holding Power Financial Corp or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Financial Corp vs. Northview Residential REIT
Performance |
| Timeline |
| Power Financial Corp |
| Northview Residential |
Power Financial and Northview Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Financial and Northview Residential
The main advantage of trading using opposite Power Financial and Northview Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Financial position performs unexpectedly, Northview Residential 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 Northview Residential will offset losses from the drop in Northview Residential's long position.| Power Financial vs. Tree Island Steel | Power Financial vs. T2 Metals Corp | Power Financial vs. Calibre Mining Corp | Power Financial vs. Mako Mining Corp |
| Northview Residential vs. Canlan Ice Sports | Northview Residential vs. Maple Leaf Foods | Northview Residential vs. Nicola Mining | Northview Residential vs. NeXGold Mining Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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