Correlation Between NorthWest Healthcare and Bce

Can any of the company-specific risk be diversified away by investing in both NorthWest Healthcare and Bce 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 NorthWest Healthcare and Bce into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NorthWest Healthcare Properties and Bce Inc Pref, you can compare the effects of market volatilities on NorthWest Healthcare and Bce 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 NorthWest Healthcare with a short position of Bce. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorthWest Healthcare and Bce.

Diversification Opportunities for NorthWest Healthcare and Bce

0.74

Correlation Coefficient

NorthWest Healthcare  Bce

Poor diversification

The 3 months correlation between NorthWest and Bce is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NorthWest Healthcare Propertie and Bce Inc Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bce Inc Pref and NorthWest Healthcare 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 NorthWest Healthcare Properties are associated (or correlated) with Bce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bce Inc Pref has no effect on the direction of NorthWest Healthcare i.e., NorthWest Healthcare and Bce go up and down completely randomly.

Pair Corralation between NorthWest Healthcare and Bce

Assuming the 90 days trading horizon NorthWest Healthcare Properties is expected to under-perform the Bce. In addition to that, NorthWest Healthcare is 1.6 times more volatile than Bce Inc Pref. It trades about -0.26 of its total potential returns per unit of risk. Bce Inc Pref is currently generating about -0.13 per unit of volatility. If you would invest  1,718  in Bce Inc Pref on September 30, 2024 and sell it today you would lose (112.00) from holding Bce Inc Pref or give up 6.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

NorthWest Healthcare Propertie  vs.  Bce Inc Pref

NorthWest Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NorthWest Healthcare Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bce Inc Pref

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bce Inc Pref has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Preferred Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with NorthWest Healthcare and Bce

The main advantage of trading using opposite NorthWest Healthcare and Bce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorthWest Healthcare position performs unexpectedly, Bce 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 Bce will offset losses from the drop in Bce's long position.

The idea behind NorthWest Healthcare Properties and Bce Inc Pref 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.