Correlation Between National Health and BII Railway
Can any of the company-specific risk be diversified away by investing in both National Health and BII Railway 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 BII Railway 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 BII Railway Transportation, you can compare the effects of market volatilities on National Health and BII Railway 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 BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and BII Railway.
Diversification Opportunities for National Health and BII Railway
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between National and BII is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of National Health i.e., National Health and BII Railway go up and down completely randomly.
Pair Corralation between National Health and BII Railway
Assuming the 90 days trading horizon National Health Investors is expected to under-perform the BII Railway. In addition to that, National Health is 1.21 times more volatile than BII Railway Transportation. It trades about -0.05 of its total potential returns per unit of risk. BII Railway Transportation is currently generating about -0.04 per unit of volatility. If you would invest 2.85 in BII Railway Transportation on November 3, 2024 and sell it today you would lose (0.05) from holding BII Railway Transportation or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. BII Railway Transportation
Performance |
| Timeline |
| National Health Investors |
| BII Railway Transpor |
National Health and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and BII Railway
The main advantage of trading using opposite National Health and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.| National Health vs. Insurance Australia Group | National Health vs. CarsalesCom | National Health vs. Zoom Video Communications | National Health vs. UNIVERSAL MUSIC GROUP |
| BII Railway vs. Accenture plc | BII Railway vs. International Business Machines | BII Railway vs. International Business Machines | BII Railway vs. Capgemini SE |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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