Correlation Between SunLink Health and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both SunLink Health and Nextera Energy 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 SunLink Health and Nextera Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunLink Health Systems and Nextera Energy, you can compare the effects of market volatilities on SunLink Health and Nextera Energy 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 SunLink Health with a short position of Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunLink Health and Nextera Energy.
Diversification Opportunities for SunLink Health and Nextera Energy
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between SunLink and Nextera is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and Nextera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy and SunLink 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 SunLink Health Systems are associated (or correlated) with Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy has no effect on the direction of SunLink Health i.e., SunLink Health and Nextera Energy go up and down completely randomly.
Pair Corralation between SunLink Health and Nextera Energy
Considering the 90-day investment horizon SunLink Health is expected to generate 2.52 times less return on investment than Nextera Energy. In addition to that, SunLink Health is 2.81 times more volatile than Nextera Energy. It trades about 0.01 of its total potential returns per unit of risk. Nextera Energy is currently generating about 0.07 per unit of volatility. If you would invest 3,450 in Nextera Energy on September 4, 2024 and sell it today you would earn a total of 878.00 from holding Nextera Energy or generate 25.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunLink Health Systems vs. Nextera Energy
Performance |
| Timeline |
| SunLink Health Systems |
| Nextera Energy |
SunLink Health and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunLink Health and Nextera Energy
The main advantage of trading using opposite SunLink Health and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunLink Health position performs unexpectedly, Nextera Energy 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 Nextera Energy will offset losses from the drop in Nextera Energy's long position.| SunLink Health vs. Leafly Holdings | SunLink Health vs. Allstar Health Brands | SunLink Health vs. Leafly Holdings | SunLink Health vs. Kiaro Holdings Corp |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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