Correlation Between National Health and LG Display
Can any of the company-specific risk be diversified away by investing in both National Health and LG Display 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 LG Display 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 LG Display Co, you can compare the effects of market volatilities on National Health and LG Display 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 LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and LG Display.
Diversification Opportunities for National Health and LG Display
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and LGA is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display 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 LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of National Health i.e., National Health and LG Display go up and down completely randomly.
Pair Corralation between National Health and LG Display
Assuming the 90 days trading horizon National Health Investors is expected to generate 2.02 times more return on investment than LG Display. However, National Health is 2.02 times more volatile than LG Display Co. It trades about 0.12 of its potential returns per unit of risk. LG Display Co is currently generating about -0.05 per unit of risk. If you would invest 6,900 in National Health Investors on August 28, 2024 and sell it today you would earn a total of 450.00 from holding National Health Investors or generate 6.52% 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. LG Display Co
Performance |
| Timeline |
| National Health Investors |
| LG Display |
National Health and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and LG Display
The main advantage of trading using opposite National Health and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, LG Display 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 LG Display will offset losses from the drop in LG Display's long position.| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
| LG Display vs. DXC Technology Co | LG Display vs. Vishay Intertechnology | LG Display vs. SOUTHWEST AIRLINES | LG Display vs. Cars Inc |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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