Correlation Between National Health and CME
Can any of the company-specific risk be diversified away by investing in both National Health and CME 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 CME 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 CME Group, you can compare the effects of market volatilities on National Health and CME 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 CME. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and CME.
Diversification Opportunities for National Health and CME
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and CME is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and CME Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CME Group 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 CME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CME Group has no effect on the direction of National Health i.e., National Health and CME go up and down completely randomly.
Pair Corralation between National Health and CME
Assuming the 90 days trading horizon National Health is expected to generate 2.67 times less return on investment than CME. In addition to that, National Health is 1.81 times more volatile than CME Group. It trades about 0.0 of its total potential returns per unit of risk. CME Group is currently generating about 0.02 per unit of volatility. If you would invest 22,310 in CME Group on October 26, 2024 and sell it today you would earn a total of 85.00 from holding CME Group or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
National Health Investors vs. CME Group
Performance |
| Timeline |
| National Health Investors |
| CME Group |
National Health and CME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and CME
The main advantage of trading using opposite National Health and CME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, CME 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 CME will offset losses from the drop in CME's long position.| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
| CME vs. United Airlines Holdings | CME vs. OPKO HEALTH | CME vs. EPSILON HEALTHCARE LTD | CME vs. National Health Investors |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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