Correlation Between National Health and Heidelberg Materials
Can any of the company-specific risk be diversified away by investing in both National Health and Heidelberg Materials 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 Heidelberg Materials 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 Heidelberg Materials AG, you can compare the effects of market volatilities on National Health and Heidelberg Materials 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 Heidelberg Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Heidelberg Materials.
Diversification Opportunities for National Health and Heidelberg Materials
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Heidelberg is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Heidelberg Materials AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Materials 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 Heidelberg Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heidelberg Materials has no effect on the direction of National Health i.e., National Health and Heidelberg Materials go up and down completely randomly.
Pair Corralation between National Health and Heidelberg Materials
Assuming the 90 days trading horizon National Health Investors is expected to under-perform the Heidelberg Materials. But the stock apears to be less risky and, when comparing its historical volatility, National Health Investors is 1.33 times less risky than Heidelberg Materials. The stock trades about -0.51 of its potential returns per unit of risk. The Heidelberg Materials AG is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 11,845 in Heidelberg Materials AG on September 22, 2024 and sell it today you would earn a total of 190.00 from holding Heidelberg Materials AG or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. Heidelberg Materials AG
Performance |
| Timeline |
| National Health Investors |
| Heidelberg Materials |
National Health and Heidelberg Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Heidelberg Materials
The main advantage of trading using opposite National Health and Heidelberg Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, Heidelberg Materials 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 Heidelberg Materials will offset losses from the drop in Heidelberg Materials' 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 |
| Heidelberg Materials vs. Superior Plus Corp | Heidelberg Materials vs. NMI Holdings | Heidelberg Materials vs. SIVERS SEMICONDUCTORS AB | Heidelberg Materials vs. NorAm Drilling AS |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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