Correlation Between Welltower and National Health
Can any of the company-specific risk be diversified away by investing in both Welltower 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 Welltower and National Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Welltower and National Health Investors, you can compare the effects of market volatilities on Welltower 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 Welltower with a short position of National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Welltower and National Health.
Diversification Opportunities for Welltower and National Health
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Welltower and National is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Welltower 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 Welltower 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 Welltower 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 Welltower i.e., Welltower and National Health go up and down completely randomly.
Pair Corralation between Welltower and National Health
Assuming the 90 days horizon Welltower is expected to generate 0.94 times more return on investment than National Health. However, Welltower is 1.07 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 0.07 per unit of risk. If you would invest 6,329 in Welltower on August 25, 2024 and sell it today you would earn a total of 6,901 from holding Welltower or generate 109.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Welltower vs. National Health Investors
Performance |
| Timeline |
| Welltower |
| National Health Investors |
Welltower and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Welltower and National Health
The main advantage of trading using opposite Welltower and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Welltower 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.| Welltower vs. Medical Properties Trust | Welltower vs. Sabra Health Care | Welltower vs. National Health Investors | Welltower vs. The GEO Group |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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