Correlation Between National Health and Matthews International
Can any of the company-specific risk be diversified away by investing in both National Health and Matthews International 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 National Health and Matthews International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Scan and Matthews International, you can compare the effects of market volatilities on National Health and Matthews International 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 National Health with a short position of Matthews International. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Matthews International.
Diversification Opportunities for National Health and Matthews International
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Matthews is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding National Health Scan and Matthews International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews International and National Health 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 National Health Scan are associated (or correlated) with Matthews International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews International has no effect on the direction of National Health i.e., National Health and Matthews International go up and down completely randomly.
Pair Corralation between National Health and Matthews International
Given the investment horizon of 90 days National Health Scan is expected to generate 5.65 times more return on investment than Matthews International. However, National Health is 5.65 times more volatile than Matthews International. It trades about 0.14 of its potential returns per unit of risk. Matthews International is currently generating about 0.27 per unit of risk. If you would invest 1.80 in National Health Scan on September 1, 2024 and sell it today you would earn a total of 0.50 from holding National Health Scan or generate 27.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Scan vs. Matthews International
Performance |
| Timeline |
| National Health Scan |
| Matthews International |
National Health and Matthews International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Matthews International
The main advantage of trading using opposite National Health and Matthews International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, Matthews International 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 Matthews International will offset losses from the drop in Matthews International's long position.| National Health vs. Emergent Health Corp | National Health vs. One World Universe | National Health vs. Nextmart | National Health vs. HeadsUp Entertainment International |
| Matthews International vs. Steel Partners Holdings | Matthews International vs. Compass Diversified | Matthews International vs. Brookfield Business Partners | Matthews International vs. Tejon Ranch Co |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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