Correlation Between National Health and Phibro Animal
Can any of the company-specific risk be diversified away by investing in both National Health and Phibro Animal 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 Phibro Animal 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 Phibro Animal Health, you can compare the effects of market volatilities on National Health and Phibro Animal 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 Phibro Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Phibro Animal.
Diversification Opportunities for National Health and Phibro Animal
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Phibro is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Phibro Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phibro Animal Health 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 Phibro Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phibro Animal Health has no effect on the direction of National Health i.e., National Health and Phibro Animal go up and down completely randomly.
Pair Corralation between National Health and Phibro Animal
Assuming the 90 days trading horizon National Health is expected to generate 16.28 times less return on investment than Phibro Animal. But when comparing it to its historical volatility, National Health Investors is 1.09 times less risky than Phibro Animal. It trades about 0.01 of its potential returns per unit of risk. Phibro Animal Health is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,960 in Phibro Animal Health on November 5, 2024 and sell it today you would earn a total of 120.00 from holding Phibro Animal Health or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. Phibro Animal Health
Performance |
| Timeline |
| National Health Investors |
| Phibro Animal Health |
National Health and Phibro Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Phibro Animal
The main advantage of trading using opposite National Health and Phibro Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, Phibro Animal 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 Phibro Animal will offset losses from the drop in Phibro Animal's long position.| National Health vs. OPERA SOFTWARE | National Health vs. Guidewire Software | National Health vs. PSI Software AG | National Health vs. CyberArk Software |
| Phibro Animal vs. QINGCI GAMES INC | Phibro Animal vs. UNIQA INSURANCE GR | Phibro Animal vs. International Game Technology | Phibro Animal vs. FRACTAL GAMING 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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