Correlation Between National Health and American Airlines
Can any of the company-specific risk be diversified away by investing in both National Health and American Airlines 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 Health and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Investors and American Airlines Group, you can compare the effects of market volatilities on National Health and American Airlines 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 Health with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and American Airlines.
Diversification Opportunities for National Health and American Airlines
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and American is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and National Health 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 Health Investors are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of National Health i.e., National Health and American Airlines go up and down completely randomly.
Pair Corralation between National Health and American Airlines
Assuming the 90 days trading horizon National Health Investors is expected to generate 0.86 times more return on investment than American Airlines. However, National Health Investors is 1.16 times less risky than American Airlines. It trades about 0.03 of its potential returns per unit of risk. American Airlines Group is currently generating about -0.38 per unit of risk. If you would invest 6,700 in National Health Investors on November 28, 2024 and sell it today you would earn a total of 50.00 from holding National Health Investors or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. American Airlines Group
Performance |
| Timeline |
| National Health Investors |
| American Airlines |
National Health and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and American Airlines
The main advantage of trading using opposite National Health and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| National Health vs. Salesforce | National Health vs. Cleanaway Waste Management | National Health vs. FLOW TRADERS LTD | National Health vs. GOME Retail Holdings |
| American Airlines vs. SMA Solar Technology | American Airlines vs. Computer And Technologies | American Airlines vs. Check Point Software | American Airlines vs. The Hanover Insurance |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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