Correlation Between NorthWest Healthcare and NeXGold Mining

Can any of the company-specific risk be diversified away by investing in both NorthWest Healthcare and NeXGold Mining 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 NeXGold Mining 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 NeXGold Mining Corp, you can compare the effects of market volatilities on NorthWest Healthcare and NeXGold Mining 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 NeXGold Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorthWest Healthcare and NeXGold Mining.

Diversification Opportunities for NorthWest Healthcare and NeXGold Mining

0.72

Correlation Coefficient

NorthWest Healthcare  NeXGold Mining

Poor diversification

The 3 months correlation between NorthWest and NeXGold is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NorthWest Healthcare Propertie and NeXGold Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeXGold Mining Corp 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 NeXGold Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeXGold Mining Corp has no effect on the direction of NorthWest Healthcare i.e., NorthWest Healthcare and NeXGold Mining go up and down completely randomly.

Pair Corralation between NorthWest Healthcare and NeXGold Mining

Assuming the 90 days trading horizon NorthWest Healthcare Properties is expected to under-perform the NeXGold Mining. But the stock apears to be less risky and, when comparing its historical volatility, NorthWest Healthcare Properties is 2.11 times less risky than NeXGold Mining. The stock trades about -0.26 of its potential returns per unit of risk. The NeXGold Mining Corp is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  83.00  in NeXGold Mining Corp on October 1, 2024 and sell it today you would lose (17.00) from holding NeXGold Mining Corp or give up 20.48% 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.  NeXGold Mining Corp

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.

NeXGold Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NeXGold Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with NorthWest Healthcare and NeXGold Mining

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

The idea behind NorthWest Healthcare Properties and NeXGold Mining Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.