Correlation Between SERI INDUSTRIAL and National Health
Can any of the company-specific risk be diversified away by investing in both SERI INDUSTRIAL 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 SERI INDUSTRIAL and National Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SERI INDUSTRIAL EO and National Health Investors, you can compare the effects of market volatilities on SERI INDUSTRIAL 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 SERI INDUSTRIAL with a short position of National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and National Health.
Diversification Opportunities for SERI INDUSTRIAL and National Health
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SERI and National is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO 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 SERI INDUSTRIAL 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 SERI INDUSTRIAL EO 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 SERI INDUSTRIAL i.e., SERI INDUSTRIAL and National Health go up and down completely randomly.
Pair Corralation between SERI INDUSTRIAL and National Health
Assuming the 90 days trading horizon SERI INDUSTRIAL EO is expected to under-perform the National Health. In addition to that, SERI INDUSTRIAL is 2.25 times more volatile than National Health Investors. It trades about -0.05 of its total potential returns per unit of risk. National Health Investors is currently generating about 0.1 per unit of volatility. If you would invest 5,890 in National Health Investors on September 1, 2024 and sell it today you would earn a total of 1,360 from holding National Health Investors or generate 23.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SERI INDUSTRIAL EO vs. National Health Investors
Performance |
| Timeline |
| SERI INDUSTRIAL EO |
| National Health Investors |
SERI INDUSTRIAL and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SERI INDUSTRIAL and National Health
The main advantage of trading using opposite SERI INDUSTRIAL and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SERI INDUSTRIAL 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.| SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc |
| National Health vs. NTG Nordic Transport | National Health vs. Transport International Holdings | National Health vs. EVS Broadcast Equipment | National Health vs. COPLAND ROAD CAPITAL |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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