Correlation Between National Health and Laureate Education
Can any of the company-specific risk be diversified away by investing in both National Health and Laureate Education 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 Laureate Education 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 Laureate Education, you can compare the effects of market volatilities on National Health and Laureate Education 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 Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Laureate Education.
Diversification Opportunities for National Health and Laureate Education
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Laureate is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education 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 Laureate Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laureate Education has no effect on the direction of National Health i.e., National Health and Laureate Education go up and down completely randomly.
Pair Corralation between National Health and Laureate Education
Assuming the 90 days trading horizon National Health Investors is expected to under-perform the Laureate Education. But the stock apears to be less risky and, when comparing its historical volatility, National Health Investors is 1.08 times less risky than Laureate Education. The stock trades about -0.25 of its potential returns per unit of risk. The Laureate Education is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,750 in Laureate Education on September 13, 2024 and sell it today you would lose (20.00) from holding Laureate Education or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. Laureate Education
Performance |
| Timeline |
| National Health Investors |
| Laureate Education |
National Health and Laureate Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Laureate Education
The main advantage of trading using opposite National Health and Laureate Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, Laureate Education 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 Laureate Education will offset losses from the drop in Laureate Education's long position.| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
| Laureate Education vs. IDP EDUCATION LTD | Laureate Education vs. Strategic Education | Laureate Education vs. Superior Plus Corp | Laureate Education vs. SIVERS SEMICONDUCTORS AB |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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