Correlation Between BII Railway and National Health
Can any of the company-specific risk be diversified away by investing in both BII Railway 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 BII Railway and National Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and National Health Investors, you can compare the effects of market volatilities on BII Railway 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 BII Railway with a short position of National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and National Health.
Diversification Opportunities for BII Railway and National Health
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BII and National is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation 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 BII Railway 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 BII Railway Transportation 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 BII Railway i.e., BII Railway and National Health go up and down completely randomly.
Pair Corralation between BII Railway and National Health
Assuming the 90 days horizon BII Railway Transportation is expected to generate 0.82 times more return on investment than National Health. However, BII Railway Transportation is 1.21 times less risky than National Health. It trades about -0.04 of its potential returns per unit of risk. National Health Investors is currently generating about -0.05 per unit of risk. If you would invest 2.85 in BII Railway Transportation on November 3, 2024 and sell it today you would lose (0.05) from holding BII Railway Transportation or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. National Health Investors
Performance |
| Timeline |
| BII Railway Transpor |
| National Health Investors |
BII Railway and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and National Health
The main advantage of trading using opposite BII Railway and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway 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.| BII Railway vs. Accenture plc | BII Railway vs. International Business Machines | BII Railway vs. International Business Machines | BII Railway vs. Capgemini SE |
| National Health vs. Insurance Australia Group | National Health vs. CarsalesCom | National Health vs. Zoom Video Communications | National Health vs. UNIVERSAL MUSIC GROUP |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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