Correlation Between Community Healthcare and National Health
Can any of the company-specific risk be diversified away by investing in both Community Healthcare 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 Community Healthcare and National Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community Healthcare Trust and National Health Investors, you can compare the effects of market volatilities on Community Healthcare 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 Community Healthcare with a short position of National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Healthcare and National Health.
Diversification Opportunities for Community Healthcare and National Health
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Community and National is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Community Healthcare Trust 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 Community 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 Community Healthcare Trust 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 Community Healthcare i.e., Community Healthcare and National Health go up and down completely randomly.
Pair Corralation between Community Healthcare and National Health
Given the investment horizon of 90 days Community Healthcare Trust is expected to generate 1.28 times more return on investment than National Health. However, Community Healthcare is 1.28 times more volatile than National Health Investors. It trades about 0.19 of its potential returns per unit of risk. National Health Investors is currently generating about 0.06 per unit of risk. If you would invest 1,730 in Community Healthcare Trust on August 28, 2024 and sell it today you would earn a total of 130.00 from holding Community Healthcare Trust or generate 7.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community Healthcare Trust vs. National Health Investors
Performance |
| Timeline |
| Community Healthcare |
| National Health Investors |
Community Healthcare and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Healthcare and National Health
The main advantage of trading using opposite Community Healthcare and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Healthcare 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.| Community Healthcare vs. Global Medical REIT | Community Healthcare vs. National Health Investors | Community Healthcare vs. Healthpeak Properties | Community Healthcare vs. Sabra Healthcare REIT |
| National Health vs. Global Medical REIT | National Health vs. Healthpeak Properties | National Health vs. Ventas Inc | National Health vs. Omega Healthcare Investors |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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