Correlation Between National Health and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both National Health and Eidesvik Offshore 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 Eidesvik Offshore 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 Eidesvik Offshore ASA, you can compare the effects of market volatilities on National Health and Eidesvik Offshore 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 Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Eidesvik Offshore.
Diversification Opportunities for National Health and Eidesvik Offshore
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between National and Eidesvik is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA 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 Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of National Health i.e., National Health and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between National Health and Eidesvik Offshore
Assuming the 90 days trading horizon National Health is expected to generate 1.37 times less return on investment than Eidesvik Offshore. But when comparing it to its historical volatility, National Health Investors is 1.89 times less risky than Eidesvik Offshore. It trades about 0.07 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 66.00 in Eidesvik Offshore ASA on September 4, 2024 and sell it today you would earn a total of 43.00 from holding Eidesvik Offshore ASA or generate 65.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
National Health Investors vs. Eidesvik Offshore ASA
Performance |
| Timeline |
| National Health Investors |
| Eidesvik Offshore ASA |
National Health and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Eidesvik Offshore
The main advantage of trading using opposite National Health and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, Eidesvik Offshore 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 Eidesvik Offshore will offset losses from the drop in Eidesvik Offshore's long position.| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
| Eidesvik Offshore vs. Halliburton | Eidesvik Offshore vs. Superior Plus Corp | Eidesvik Offshore vs. NMI Holdings | Eidesvik Offshore vs. Origin Agritech |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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