Correlation Between Apple and National Health
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and National Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and National Health Investors, you can compare the effects of market volatilities on Apple 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 Apple with a short position of National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and National Health.
Diversification Opportunities for Apple and National Health
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and National is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and National Health go up and down completely randomly.
Pair Corralation between Apple and National Health
Assuming the 90 days trading horizon Apple is expected to generate 1.41 times less return on investment than National Health. But when comparing it to its historical volatility, Apple Inc is 1.96 times less risky than National Health. It trades about 0.11 of its potential returns per unit of risk. National Health Investors is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,900 in National Health Investors on August 30, 2024 and sell it today you would earn a total of 300.00 from holding National Health Investors or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. National Health Investors
Performance |
| Timeline |
| Apple Inc |
| National Health Investors |
Apple and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and National Health
The main advantage of trading using opposite Apple and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. UMC Electronics Co | Apple vs. BW OFFSHORE LTD | Apple vs. BYD ELECTRONIC | Apple vs. United Rentals |
| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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