Correlation Between NATIONAL HEALTHCARE and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both NATIONAL HEALTHCARE and Quaker Chemical 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 HEALTHCARE and Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NATIONAL HEALTHCARE and Quaker Chemical, you can compare the effects of market volatilities on NATIONAL HEALTHCARE and Quaker Chemical 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 HEALTHCARE with a short position of Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL HEALTHCARE and Quaker Chemical.
Diversification Opportunities for NATIONAL HEALTHCARE and Quaker Chemical
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NATIONAL and Quaker is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL HEALTHCARE and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and NATIONAL 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 NATIONAL HEALTHCARE are associated (or correlated) with Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of NATIONAL HEALTHCARE i.e., NATIONAL HEALTHCARE and Quaker Chemical go up and down completely randomly.
Pair Corralation between NATIONAL HEALTHCARE and Quaker Chemical
Assuming the 90 days trading horizon NATIONAL HEALTHCARE is expected to under-perform the Quaker Chemical. In addition to that, NATIONAL HEALTHCARE is 1.21 times more volatile than Quaker Chemical. It trades about -0.62 of its total potential returns per unit of risk. Quaker Chemical is currently generating about -0.56 per unit of volatility. If you would invest 14,700 in Quaker Chemical on October 11, 2024 and sell it today you would lose (1,700) from holding Quaker Chemical or give up 11.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
NATIONAL HEALTHCARE vs. Quaker Chemical
Performance |
| Timeline |
| NATIONAL HEALTHCARE |
| Quaker Chemical |
NATIONAL HEALTHCARE and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NATIONAL HEALTHCARE and Quaker Chemical
The main advantage of trading using opposite NATIONAL HEALTHCARE and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NATIONAL HEALTHCARE position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| NATIONAL HEALTHCARE vs. Quaker Chemical | NATIONAL HEALTHCARE vs. KINGBOARD CHEMICAL | NATIONAL HEALTHCARE vs. INDO RAMA SYNTHETIC | NATIONAL HEALTHCARE vs. SAN MIGUEL BREWERY |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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