Correlation Between National Health and Natural Health
Can any of the company-specific risk be diversified away by investing in both National Health and Natural Health 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 Natural Health 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 Natural Health Trends, you can compare the effects of market volatilities on National Health and Natural Health 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 Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Natural Health.
Diversification Opportunities for National Health and Natural Health
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Natural is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Natural Health Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trends 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 Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trends has no effect on the direction of National Health i.e., National Health and Natural Health go up and down completely randomly.
Pair Corralation between National Health and Natural Health
Assuming the 90 days trading horizon National Health Investors is expected to generate 0.86 times more return on investment than Natural Health. However, National Health Investors is 1.16 times less risky than Natural Health. It trades about 0.12 of its potential returns per unit of risk. Natural Health Trends 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. Natural Health Trends
Performance |
| Timeline |
| National Health Investors |
| Natural Health Trends |
National Health and Natural Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Natural Health
The main advantage of trading using opposite National Health and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, Natural Health 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 Natural Health will offset losses from the drop in Natural Health's long position.| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
| Natural Health vs. Fast Retailing Co | Natural Health vs. Burlington Stores | Natural Health vs. Ross Stores | Natural Health vs. RETAIL FOOD GROUP |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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