Correlation Between EHEALTH and National Health
Can any of the company-specific risk be diversified away by investing in both EHEALTH 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 EHEALTH and National Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EHEALTH and National Health Investors, you can compare the effects of market volatilities on EHEALTH 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 EHEALTH with a short position of National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of EHEALTH and National Health.
Diversification Opportunities for EHEALTH and National Health
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EHEALTH and National is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding EHEALTH 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 EHEALTH 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 EHEALTH 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 EHEALTH i.e., EHEALTH and National Health go up and down completely randomly.
Pair Corralation between EHEALTH and National Health
Assuming the 90 days trading horizon EHEALTH is expected to generate 1.24 times more return on investment than National Health. However, EHEALTH is 1.24 times more volatile than National Health Investors. It trades about 0.13 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 437.00 in EHEALTH on August 24, 2024 and sell it today you would earn a total of 41.00 from holding EHEALTH or generate 9.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
EHEALTH vs. National Health Investors
Performance |
| Timeline |
| EHEALTH |
| National Health Investors |
EHEALTH and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EHEALTH and National Health
The main advantage of trading using opposite EHEALTH and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EHEALTH 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.The idea behind EHEALTH and National Health Investors pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| National Health vs. Qurate Retail Series | National Health vs. FAST RETAIL ADR | National Health vs. Burlington Stores | National Health vs. Japan Medical Dynamic |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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