Correlation Between PARKWAY LIFE and National Health
Can any of the company-specific risk be diversified away by investing in both PARKWAY LIFE and National Health 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 PARKWAY LIFE and National Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PARKWAY LIFE REAL and National Health Investors, you can compare the effects of market volatilities on PARKWAY LIFE and National Health 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 PARKWAY LIFE with a short position of National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKWAY LIFE and National Health.
Diversification Opportunities for PARKWAY LIFE and National Health
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PARKWAY and National is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding PARKWAY LIFE REAL and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors and PARKWAY LIFE 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 PARKWAY LIFE REAL are associated (or correlated) with National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of PARKWAY LIFE i.e., PARKWAY LIFE and National Health go up and down completely randomly.
Pair Corralation between PARKWAY LIFE and National Health
Assuming the 90 days trading horizon PARKWAY LIFE is expected to generate 2.95 times less return on investment than National Health. In addition to that, PARKWAY LIFE is 1.22 times more volatile than National Health Investors. It trades about 0.02 of its total potential returns per unit of risk. National Health Investors is currently generating about 0.07 per unit of volatility. If you would invest 4,625 in National Health Investors on August 25, 2024 and sell it today you would earn a total of 2,725 from holding National Health Investors or generate 58.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PARKWAY LIFE REAL vs. National Health Investors
Performance |
| Timeline |
| PARKWAY LIFE REAL |
| National Health Investors |
PARKWAY LIFE and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PARKWAY LIFE and National Health
The main advantage of trading using opposite PARKWAY LIFE and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARKWAY LIFE position performs unexpectedly, National Health 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 National Health will offset losses from the drop in National Health's long position.| PARKWAY LIFE vs. Welltower | PARKWAY LIFE vs. Medical Properties Trust | PARKWAY LIFE vs. Sabra Health Care | PARKWAY LIFE vs. National Health Investors |
| National Health vs. Nordic Semiconductor ASA | National Health vs. Geratherm Medical AG | National Health vs. Advanced Medical Solutions | National Health vs. Apyx Medical 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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