Correlation Between National Health and LyondellBasell Industries
Can any of the company-specific risk be diversified away by investing in both National Health and LyondellBasell Industries 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 LyondellBasell Industries 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 LyondellBasell Industries NV, you can compare the effects of market volatilities on National Health and LyondellBasell Industries 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 LyondellBasell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and LyondellBasell Industries.
Diversification Opportunities for National Health and LyondellBasell Industries
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and LyondellBasell is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and LyondellBasell Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LyondellBasell Industries 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 LyondellBasell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LyondellBasell Industries has no effect on the direction of National Health i.e., National Health and LyondellBasell Industries go up and down completely randomly.
Pair Corralation between National Health and LyondellBasell Industries
Assuming the 90 days trading horizon National Health Investors is expected to generate 1.05 times more return on investment than LyondellBasell Industries. However, National Health is 1.05 times more volatile than LyondellBasell Industries NV. It trades about 0.06 of its potential returns per unit of risk. LyondellBasell Industries NV is currently generating about 0.01 per unit of risk. If you would invest 4,405 in National Health Investors on September 14, 2024 and sell it today you would earn a total of 2,545 from holding National Health Investors or generate 57.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. LyondellBasell Industries NV
Performance |
| Timeline |
| National Health Investors |
| LyondellBasell Industries |
National Health and LyondellBasell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and LyondellBasell Industries
The main advantage of trading using opposite National Health and LyondellBasell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, LyondellBasell Industries 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 LyondellBasell Industries will offset losses from the drop in LyondellBasell Industries' long position.| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
| LyondellBasell Industries vs. National Health Investors | LyondellBasell Industries vs. GUARDANT HEALTH CL | LyondellBasell Industries vs. VITEC SOFTWARE GROUP | LyondellBasell Industries vs. Carsales |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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