Correlation Between National Research and EGF Theramed
Can any of the company-specific risk be diversified away by investing in both National Research and EGF Theramed 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 Research and EGF Theramed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Research Corp and EGF Theramed Health, you can compare the effects of market volatilities on National Research and EGF Theramed 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 Research with a short position of EGF Theramed. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Research and EGF Theramed.
Diversification Opportunities for National Research and EGF Theramed
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and EGF is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding National Research Corp and EGF Theramed Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EGF Theramed Health and National Research 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 Research Corp are associated (or correlated) with EGF Theramed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EGF Theramed Health has no effect on the direction of National Research i.e., National Research and EGF Theramed go up and down completely randomly.
Pair Corralation between National Research and EGF Theramed
Considering the 90-day investment horizon National Research is expected to generate 20.66 times less return on investment than EGF Theramed. But when comparing it to its historical volatility, National Research Corp is 10.63 times less risky than EGF Theramed. It trades about 0.14 of its potential returns per unit of risk. EGF Theramed Health is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 5.70 in EGF Theramed Health on August 31, 2024 and sell it today you would earn a total of 15.30 from holding EGF Theramed Health or generate 268.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Research Corp vs. EGF Theramed Health
Performance |
| Timeline |
| National Research Corp |
| EGF Theramed Health |
National Research and EGF Theramed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Research and EGF Theramed
The main advantage of trading using opposite National Research and EGF Theramed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Research position performs unexpectedly, EGF Theramed 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 EGF Theramed will offset losses from the drop in EGF Theramed's long position.| National Research vs. Evolent Health | National Research vs. Simulations Plus | National Research vs. Privia Health Group | National Research vs. HealthStream |
| EGF Theramed vs. GE HealthCare Technologies | EGF Theramed vs. Veeva Systems Class | EGF Theramed vs. M3 Inc | EGF Theramed vs. M3 Inc |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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