Correlation Between TECSYS and Extendicare
Can any of the company-specific risk be diversified away by investing in both TECSYS 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 TECSYS and Extendicare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TECSYS Inc and Extendicare, you can compare the effects of market volatilities on TECSYS 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 TECSYS with a short position of Extendicare. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECSYS and Extendicare.
Diversification Opportunities for TECSYS and Extendicare
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TECSYS and Extendicare is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding TECSYS Inc and Extendicare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extendicare and TECSYS 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 TECSYS Inc 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 TECSYS i.e., TECSYS and Extendicare go up and down completely randomly.
Pair Corralation between TECSYS and Extendicare
Assuming the 90 days trading horizon TECSYS is expected to generate 2.47 times less return on investment than Extendicare. In addition to that, TECSYS is 1.09 times more volatile than Extendicare. It trades about 0.05 of its total potential returns per unit of risk. Extendicare is currently generating about 0.15 per unit of volatility. If you would invest 241.00 in Extendicare on November 2, 2024 and sell it today you would earn a total of 802.00 from holding Extendicare or generate 332.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TECSYS Inc vs. Extendicare
Performance |
| Timeline |
| TECSYS Inc |
| Extendicare |
TECSYS and Extendicare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECSYS and Extendicare
The main advantage of trading using opposite TECSYS and Extendicare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECSYS 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.The idea behind TECSYS Inc and Extendicare pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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