Correlation Between Natural Health and National Health
Can any of the company-specific risk be diversified away by investing in both Natural Health 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 Natural Health and National Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Health Trends and National Health Investors, you can compare the effects of market volatilities on Natural Health 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 Natural Health with a short position of National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and National Health.
Diversification Opportunities for Natural Health and National Health
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Natural and National is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends 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 Natural 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 Natural Health Trends 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 Natural Health i.e., Natural Health and National Health go up and down completely randomly.
Pair Corralation between Natural Health and National Health
Assuming the 90 days trading horizon Natural Health Trends is expected to under-perform the National Health. In addition to that, Natural Health is 1.14 times more volatile than National Health Investors. It trades about -0.04 of its total potential returns per unit of risk. National Health Investors is currently generating about 0.06 per unit of volatility. If you would invest 7,000 in National Health Investors on August 24, 2024 and sell it today you would earn a total of 200.00 from holding National Health Investors or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Health Trends vs. National Health Investors
Performance |
| Timeline |
| Natural Health Trends |
| National Health Investors |
Natural Health and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and National Health
The main advantage of trading using opposite Natural Health and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health 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.| Natural Health vs. Gamma Communications plc | Natural Health vs. GREENX METALS LTD | Natural Health vs. GALENA MINING LTD | Natural Health vs. Citic Telecom International |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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