Correlation Between National Health and HEINEKEN
Can any of the company-specific risk be diversified away by investing in both National Health and HEINEKEN 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 HEINEKEN 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 HEINEKEN SP ADR, you can compare the effects of market volatilities on National Health and HEINEKEN 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 HEINEKEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and HEINEKEN.
Diversification Opportunities for National Health and HEINEKEN
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and HEINEKEN is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and HEINEKEN SP ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEINEKEN SP ADR 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 HEINEKEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEINEKEN SP ADR has no effect on the direction of National Health i.e., National Health and HEINEKEN go up and down completely randomly.
Pair Corralation between National Health and HEINEKEN
Assuming the 90 days trading horizon National Health Investors is expected to generate 1.35 times more return on investment than HEINEKEN. However, National Health is 1.35 times more volatile than HEINEKEN SP ADR. It trades about 0.11 of its potential returns per unit of risk. HEINEKEN SP ADR is currently generating about -0.06 per unit of risk. If you would invest 4,800 in National Health Investors on September 4, 2024 and sell it today you would earn a total of 2,450 from holding National Health Investors or generate 51.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. HEINEKEN SP ADR
Performance |
| Timeline |
| National Health Investors |
| HEINEKEN SP ADR |
National Health and HEINEKEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and HEINEKEN
The main advantage of trading using opposite National Health and HEINEKEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, HEINEKEN 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 HEINEKEN will offset losses from the drop in HEINEKEN's long position.| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
| HEINEKEN vs. EPSILON HEALTHCARE LTD | HEINEKEN vs. Sabra Health Care | HEINEKEN vs. National Health Investors | HEINEKEN vs. SHIP HEALTHCARE HLDGINC |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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