Correlation Between National Health and Plastic Omnium
Can any of the company-specific risk be diversified away by investing in both National Health and Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium, you can compare the effects of market volatilities on National Health and Plastic Omnium 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 Plastic Omnium. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Plastic Omnium.
Diversification Opportunities for National Health and Plastic Omnium
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and Plastic is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic Omnium 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 Plastic Omnium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic Omnium has no effect on the direction of National Health i.e., National Health and Plastic Omnium go up and down completely randomly.
Pair Corralation between National Health and Plastic Omnium
Assuming the 90 days trading horizon National Health Investors is expected to under-perform the Plastic Omnium. But the stock apears to be less risky and, when comparing its historical volatility, National Health Investors is 2.37 times less risky than Plastic Omnium. The stock trades about -0.51 of its potential returns per unit of risk. The Plastic Omnium is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 789.00 in Plastic Omnium on September 22, 2024 and sell it today you would earn a total of 188.00 from holding Plastic Omnium or generate 23.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. Plastic Omnium
Performance |
| Timeline |
| National Health Investors |
| Plastic Omnium |
National Health and Plastic Omnium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Plastic Omnium
The main advantage of trading using opposite National Health and Plastic Omnium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, Plastic Omnium 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 Plastic Omnium will offset losses from the drop in Plastic Omnium's long position.| National Health vs. Schweizer Electronic AG | National Health vs. SIDETRADE EO 1 | National Health vs. ARROW ELECTRONICS | National Health vs. American Eagle Outfitters |
| Plastic Omnium vs. OAKTRSPECLENDNEW | Plastic Omnium vs. Webster Financial | Plastic Omnium vs. REVO INSURANCE SPA | Plastic Omnium vs. Magnachip Semiconductor |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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