Correlation Between RCI Hospitality and National Health
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality 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 RCI Hospitality and National Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCI Hospitality Holdings and National Health Investors, you can compare the effects of market volatilities on RCI Hospitality 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 RCI Hospitality with a short position of National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and National Health.
Diversification Opportunities for RCI Hospitality and National Health
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RCI and National is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings 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 RCI Hospitality 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 RCI Hospitality Holdings 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 RCI Hospitality i.e., RCI Hospitality and National Health go up and down completely randomly.
Pair Corralation between RCI Hospitality and National Health
Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to under-perform the National Health. But the stock apears to be less risky and, when comparing its historical volatility, RCI Hospitality Holdings is 1.19 times less risky than National Health. The stock trades about -0.11 of its potential returns per unit of risk. The National Health Investors is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 6,650 in National Health Investors on November 3, 2024 and sell it today you would lose (150.00) from holding National Health Investors or give up 2.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. National Health Investors
Performance |
| Timeline |
| RCI Hospitality Holdings |
| National Health Investors |
RCI Hospitality and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and National Health
The main advantage of trading using opposite RCI Hospitality and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality 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.| RCI Hospitality vs. Inspire Medical Systems | RCI Hospitality vs. Ares Management Corp | RCI Hospitality vs. Acadia Healthcare | RCI Hospitality vs. Siemens Healthineers AG |
| National Health vs. Insurance Australia Group | National Health vs. CarsalesCom | National Health vs. Zoom Video Communications | National Health vs. UNIVERSAL MUSIC GROUP |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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