Correlation Between National Health and Takeda Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both National Health and Takeda Pharmaceutical 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 Takeda Pharmaceutical 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 Takeda Pharmaceutical, you can compare the effects of market volatilities on National Health and Takeda Pharmaceutical 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 Takeda Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Takeda Pharmaceutical.
Diversification Opportunities for National Health and Takeda Pharmaceutical
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Takeda is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Takeda Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takeda Pharmaceutical 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 Takeda Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takeda Pharmaceutical has no effect on the direction of National Health i.e., National Health and Takeda Pharmaceutical go up and down completely randomly.
Pair Corralation between National Health and Takeda Pharmaceutical
Assuming the 90 days trading horizon National Health Investors is expected to generate 1.31 times more return on investment than Takeda Pharmaceutical. However, National Health is 1.31 times more volatile than Takeda Pharmaceutical. It trades about 0.06 of its potential returns per unit of risk. Takeda Pharmaceutical is currently generating about -0.01 per unit of risk. If you would invest 4,710 in National Health Investors on August 30, 2024 and sell it today you would earn a total of 2,490 from holding National Health Investors or generate 52.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. Takeda Pharmaceutical
Performance |
| Timeline |
| National Health Investors |
| Takeda Pharmaceutical |
National Health and Takeda Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Takeda Pharmaceutical
The main advantage of trading using opposite National Health and Takeda Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, Takeda Pharmaceutical 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 Takeda Pharmaceutical will offset losses from the drop in Takeda Pharmaceutical'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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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