Correlation Between NYSE Composite and National Health
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and National Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and National Health Scan, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and National Health.
Diversification Opportunities for NYSE Composite and National Health
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between NYSE and National is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and National Health Scan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Scan and NYSE Composite 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 NYSE Composite 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 Scan has no effect on the direction of NYSE Composite i.e., NYSE Composite and National Health go up and down completely randomly.
Pair Corralation between NYSE Composite and National Health
Assuming the 90 days trading horizon NYSE Composite is expected to generate 20.07 times less return on investment than National Health. But when comparing it to its historical volatility, NYSE Composite is 21.98 times less risky than National Health. It trades about 0.08 of its potential returns per unit of risk. National Health Scan is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1.60 in National Health Scan on September 1, 2024 and sell it today you would earn a total of 0.70 from holding National Health Scan or generate 43.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. National Health Scan
Performance |
| Timeline |
NYSE Composite and National Health Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
National Health Scan
Pair trading matchups for National Health
Pair Trading with NYSE Composite and National Health
The main advantage of trading using opposite NYSE Composite and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| National Health vs. Emergent Health Corp | National Health vs. One World Universe | National Health vs. Nextmart | National Health vs. HeadsUp Entertainment International |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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