Correlation Between National Health and FIREWEED METALS
Can any of the company-specific risk be diversified away by investing in both National Health and FIREWEED METALS 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 FIREWEED METALS 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 FIREWEED METALS P, you can compare the effects of market volatilities on National Health and FIREWEED METALS 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 FIREWEED METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and FIREWEED METALS.
Diversification Opportunities for National Health and FIREWEED METALS
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and FIREWEED is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and FIREWEED METALS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIREWEED METALS P 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 FIREWEED METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIREWEED METALS P has no effect on the direction of National Health i.e., National Health and FIREWEED METALS go up and down completely randomly.
Pair Corralation between National Health and FIREWEED METALS
Assuming the 90 days trading horizon National Health Investors is expected to generate 1.42 times more return on investment than FIREWEED METALS. However, National Health is 1.42 times more volatile than FIREWEED METALS P. It trades about 0.11 of its potential returns per unit of risk. FIREWEED METALS P is currently generating about -0.02 per unit of risk. If you would invest 6,850 in National Health Investors on September 3, 2024 and sell it today you would earn a total of 400.00 from holding National Health Investors or generate 5.84% 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. FIREWEED METALS P
Performance |
| Timeline |
| National Health Investors |
| FIREWEED METALS P |
National Health and FIREWEED METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and FIREWEED METALS
The main advantage of trading using opposite National Health and FIREWEED METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, FIREWEED METALS 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 FIREWEED METALS will offset losses from the drop in FIREWEED METALS's long position.| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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