Correlation Between United Bankers and Nightingale Health
Can any of the company-specific risk be diversified away by investing in both United Bankers and Nightingale 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 United Bankers and Nightingale Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bankers Oyj and Nightingale Health Oyj, you can compare the effects of market volatilities on United Bankers and Nightingale 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 United Bankers with a short position of Nightingale Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bankers and Nightingale Health.
Diversification Opportunities for United Bankers and Nightingale Health
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Nightingale is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding United Bankers Oyj and Nightingale Health Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nightingale Health Oyj and United Bankers 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 United Bankers Oyj are associated (or correlated) with Nightingale Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nightingale Health Oyj has no effect on the direction of United Bankers i.e., United Bankers and Nightingale Health go up and down completely randomly.
Pair Corralation between United Bankers and Nightingale Health
Assuming the 90 days trading horizon United Bankers is expected to generate 3.3 times less return on investment than Nightingale Health. But when comparing it to its historical volatility, United Bankers Oyj is 2.44 times less risky than Nightingale Health. It trades about 0.07 of its potential returns per unit of risk. Nightingale Health Oyj is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 116.00 in Nightingale Health Oyj on August 26, 2024 and sell it today you would earn a total of 160.00 from holding Nightingale Health Oyj or generate 137.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Bankers Oyj vs. Nightingale Health Oyj
Performance |
| Timeline |
| United Bankers Oyj |
| Nightingale Health Oyj |
United Bankers and Nightingale Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bankers and Nightingale Health
The main advantage of trading using opposite United Bankers and Nightingale Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bankers position performs unexpectedly, Nightingale 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 Nightingale Health will offset losses from the drop in Nightingale Health's long position.| United Bankers vs. Vaisala Oyj A | United Bankers vs. CapMan Oyj B | United Bankers vs. HKFoods Oyj A | United Bankers vs. KONE Oyj |
| Nightingale Health vs. Vaisala Oyj A | Nightingale Health vs. CapMan Oyj B | Nightingale Health vs. HKFoods Oyj A | Nightingale Health vs. KONE Oyj |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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